[Background Material and Data on Programs within the Jurisdiction of the Committee on Ways and Means (Green Book)]
[Program Descriptions]
[Section 8. Child Support Enforcement Program]
[From the U.S. Government Printing Office, www.gpo.gov]




 
SECTION 8-CHILD SUPPORT ENFORCEMENT PROGRAM

CONTENTS

Background
  	Overview
  	Demographic Trends
  	Program Trends
The Federal Role
The State Role
The Child Support Enforcement Process
  	Locating Absent Parents
  	 Establishing Paternity
  	 Establishing Orders
  	 Reviewing and Modifying Orders
  	 Establishing and Enforcing Medical Support
  	 Collecting Child Support
  	 Interstate Enforcement
  	 Private Collection Activities
State Collection and Disbursement of Support Payments
Bankruptcy and Child Support Enforcement
Automated Systems
Audits and Financial Penalties
Assignment and Distribution of Child Support Collections
  	Distribution of Payments While the Family Receives Public         
Assistance
  	 Distribution of Payments After the Family Leaves Public
           Assistance
Funding of State Programs
How Effective is Child Support Enforcement?
  	 Impact on Taxpayers
  	 Impact on Poverty
  	 Impact on National Child Support Payments
Legislative History
	104th Congress
	105th Congress
	106th Congress
Statistical Tables
References


BACKGROUND

OVERVIEW

In 1950, when only a small minority of children were in female-headed 
families, the Federal Government took its first steps into the child 
support arena. Congress amended the Aid to Families with Dependent 
Children (AFDC) law by requiring State welfare agencies to notify law 
enforcement officials when benefits were being furnished to a child who 
had been abandoned by one of his or her parents. Presumably, local 
officials would then undertake to locate nonresident parents and make 
them pay child support. From 1950 to 1975, the Federal Government 
confined its child support efforts to these welfare children. With this 
exception, most Americans thought that child support establishment and 
collection was a domestic relations issue that should be dealt with at 
the State level by the courts.	
By the early 1970s, however, Congress recognized that the composition 
of the AFDC caseload had changed drastically. In earlier years the 
majority of children needed financial assistance because their fathers 
had died; by the 1970s, the majority needed aid because their parents 
were separated, divorced, or never married. The Child Support 
Enforcement (CSE) and Paternity Establishment program, enacted in 1975, 
was a response by Congress to reduce public expenditures on welfare by 
obtaining support from noncustodial parents on an ongoing basis, to 
help non-AFDC families get support so they could stay off public 
assistance, and to establish paternity for children born outside 
marriage so child support could be obtained for them.
The 1975 legislation (Public Law 93-647) added a new part D to title 
IV of the Social Security Act. This statute, as amended, authorizes 
Federal matching funds to be used for enforcing support obligations 
by locating nonresident parents, establishing paternity, establishing 
child support awards, and collecting child support payments. Since 
1981, child support agencies have also been permitted to collect 
spousal support on behalf of custodial parents, and in 1984 they were 
required to petition for medical support as part of most child support 
orders. Basic responsibility for administering the program is left to 
States, but the Federal Government plays a major role in: dictating 
the major design features of State programs; funding, monitoring and 
evaluating State programs; providing technical assistance; and giving 
assistance to States in locating absent parents and obtaining support 
payments. The program requires the provision of child support 
enforcement (CSE) services for both welfare and nonwelfare families 
and requires States to publicize frequently, through public service 
announcements, the availability of child support enforcement services, 
together with information about the application fee and a telephone 
number or address to obtain additional information. Local family and 
domestic courts and administrative agencies handle the actual 
establishment and enforcement of child support obligations according 
to Federal, State, and local laws.
The child support program generally does not provide services aimed at 
other issues between parents, such as property settlement, custody, and
access to children. These issues are handled by local courts with the 
help of private attorneys. Any parent who needs help in locating an 
absent parent, establishing paternity, establishing a support 
obligation, or enforcing a support obligation may apply for CSE 
services. Parents receiving benefits (or who formerly received 
benefits) under the successor program to AFDC (Temporary Assistance 
for Needy Families or TANF), the federally assisted foster care 
program, or the Medicaid Program, automatically receive CSE services. 
Services are free to such recipients, but others (i.e., nonwelfare 
clients) are charged up to $25 for services. States can charge fees 
based on a sliding scale, pay fees out of State funds, or recover the 
fees from the noncustodial parent.
	In 1996, Public Law 104-193, the Personal Responsibility and 
Work Opportunity Reconciliation Act of 1996, abolished AFDC and related
programs and replaced them with the TANF block grant program. Under 
the new law, each State must operate a CSE Program meeting Federal 
requirements in order to be eligible for TANF funds. In addition to 
abolishing AFDC, Public Law 104-193 made about 50 changes to the CSE 
Program, many of them major. These changes include requiring States to 
increase the percentage of noncustodial parents identified, 
establishing an integrated, automated network linking all States to 
information about the location and assets of parents, requiring States 
to implement more enforcement techniques, and revising the rules 
governing the distribution of past due (arrearage) child support 
payments to former recipients of public assistance.

DEMOGRAPHIC TRENDS

   	The need for an effective child support program is clearly 
supported by a brief review of the demographic trends of the American 
family. By 2001, there were an estimated 11.5 million single-parent 
families with children under age 18; about 9.2 million (80 percent) 
were maintained by the mother and roughly 2.3 million by the father 
(Bureau of Labor Statistics and Census Bureau, 2002, Table 17). It 
appears that the rate of growth in the number of single parents has 
stabilized. The average annual percent increase in the number of one-
parent families was 2.1 percent from 1990 to 2000 and 2.8 percent from 
1980 to 1990 as compared with 8.9 percent from 1970 to 1980. In 2001, 
one-parent families comprised nearly 30 percent of all families. The 
corresponding share of single-parent families in 1970 was 11 percent.
In 2000, about 43 percent of the mothers had never been married, 35 
percent were divorced, 18 percent were separated from their spouse,
and about 4 percent were widowed (U.S. Census Bureau, 2001, p. 8).
Of equal concern, dynamic estimates indicated that at least half of 
all  children born in the United States during the late 1970s and early 
1980s would live with a single parent before reaching adulthood. For 
black children, the projection was about 80 percent (Bumpass, 1984). 
Currently, about 27 percent of the  72 million children under age 18 
living in the United States reside in a one-parent family. Although the
number of families with a mother who has divorced has tripled since 
1970, the number with a mother who has never married has increased 
almost sixteen-fold from 248,000 to 4,181,000. In these latter cases, 
paternity must be determined before the other parent has a legal 
obligation to financially support the child. The nearly 4.2 million
families maintained by a never-married mother in  2000 represent a 
major concern because only about two-thirds of the children in these
families have had their paternity established; for the other one-third, 
a child support obligation cannot be established until a paternity 
determination is made.  Poverty is endemic among mother-headed 
families. In 2001, 33.6 percent of the 9.2 million families maintained 
solely by a mother with children under 18 had incomes below the poverty 
threshold (Bureau of Labor Statistics and Census Bureau, 2002, 
Table 17). About 11 percent of these families were poor despite the 
fact that the mother worked year round, full time. In sum, an 
unprecedented number of children live in single-parent homes, about 
34 percent are poor, and many lack adequate or any support from the 
nonresident parent.

PROGRAM TRENDS

In response to these demographic trends, the Federal-State child 
support program grew rapidly. By 2001, about 60 percent of all child 
support eligible families were actually receiving government funded 
child support services. Most of the information in this chapter 
applies to the families receiving these government services. Table 
8-1 summarizes trends for the child support program since 1978. In 
2002, $5.2 billion was spent by State child support programs to 
collect $20.1 billion in child support. The combined Federal-State
program had 61,797 employees. A sum of $3.88 was collected for every 
dollar of administrative expense, up by about 34 percent from the low 
point of only $2.89 in 1982. In addition, in 2002 1.5 million 
paternities were established or acknowledged; almost 1.2 million 
support orders were established; and 7.8 million cases had 
collections.  Moreover, in 2001 330,000 families were removed from 
TANF because of child support collections  (Office of Child Support, 
2003a). These program trends demonstrate that more and more positive 
child support outcomes have been achieved by the Federal-State 
program. But whether these trends indicate program success is a 
complex matter that will be discussed in more detail below. We turn
now to a detailed explanation of the Federal-State program and both 
its achievements and problems.

THE FEDERAL ROLE

The Federal statute requires the national child support program to be 
administered by a separate organizational unit under the control of a 
person designated by and reporting directly to the Secretary of the
U.S. Department of Health and Human Services (HHS). Presently, this 
office is known as the Federal Office of Child Support Enforcement 
(OCSE). The Family Support Act of 1988 required the appointment of an 
Assistant Secretary for Family Support within HHS to administer a
number of programs, including the Child Support Enforcement program. 
Currently, this position is entitled the Assistant Secretary for the 
Administration for Children and Families.  A primary responsibility of 
the  Assistant Secretary is to establish standards for State programs 
for locating absent parents, establishing paternity, and obtaining 
child support and support for the spouse (or former spouse) with whom 
the child is living. In addition to this broad statutory mandate, the 
Assistant Secretary is required to establish minimum organizational 
and staffing requirements for State child support agencies, and to 
review and approve State plans.
	The statute also requires the Assistant Secretary to provide 
technical assistance to States to help them establish effective 
systems for collecting support and establishing paternity. To fulfill 
this requirement, OCSE operates a National Child Support Enforcement 
Reference Center as a central location for the collection and 
dissemination of information about State and local programs. OCSE also 
provides, under a contract with the American Bar Association Child 
Support Project, training and information dissemination on legal 
issues to persons working in the field of child support enforcement. 
Special initiatives, such as assisting major urban areas in improving 
program performance, also have been undertaken by OCSE.
The Child Support Enforcement Amendments of 1984 (Public Law 98-378) 
extended the research and demonstration authority in section 1115 of 
the Social Security Act to the Child Support Enforcement program. This 
authority makes it possible for States to test innovative approaches 
to support enforcement so long as the modification does not 
disadvantage children in need of support nor result in an increase 
in Federal TANF costs. The 1984 amendments also authorize $15 million 
for each fiscal year after 1986 for special project grants to promote 
improvement in interstate enforcement. In fiscal year 1999, 38 States 
had section 1115 grants or waivers which directly impacted child 
support: 6 States had waivers to implement models of collaboration 
among the CSE agency, Head Start Programs, and child care programs; 
4 States had waivers to test new ways of reviewing and modifying 
orders; 4 States had waivers designed to improve CSE for Native 
Americans; 3 States had waivers to test different approaches to 
handling CSE cases with a history of domestic violence; 3 States had
waivers to measure and improve CSE Program performance; and other 
States had waivers related to access and visitation, 


TABLE 8-1--SUMMARY OF NATIONAL CHILD SUPPORT PROGRAM STATISTICS,  
SELECTED FISCAL YEARS 1978-2002 



[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]



child support assurance, fatherhood initiatives, job training, 
parenting, interviewing and client referral, paternity establishment, 
and staffing standards.
	The Assistant Secretary for Children and Families has full 
responsibility for the evaluation of the CSE Program. Pursuant to 
Public Law 104-193, States must annually review and report to the 
Secretary of HHS information adequate to determine the State's 
compliance with Federal requirements for expedited procedures, timely 
case processing, and improvement on the performance indicators. To 
measure the quality of the data reported by States and to assess the 
adequacy of financial management of the State program, the Secretary 
must conduct an audit of every State at least once every 3 years and 
more often if a State fails to meet Federal requirements. Under the 
audit's penalty provision, a State's TANF Block Grant must be reduced 
by an amount equal to at least 1 but not more than 2 percent for the 
first failure to comply substantially with the standards and 
requirements, at least 2 but not more than 3 percent for the second 
failure, and at least 3 but not more than 5 percent for the third and 
subsequent failures.
	The 1996 welfare reform law set aside 1 percent of the Federal 
share of retained child support collections for information 
dissemination and technical assistance to States (including technical 
assistance related to automated systems), training of State and Federal 
staff, staffing studies, and related activities needed to improve the 
CSE Program, and research, demonstration, and special projects of 
regional or national significance relating to the operation of the CSE
Program. An additional 2 percent of the Federal share of retained child 
support collections is set aside for the operation of the Federal 
Parent Locator Service (FPLS).
	The statute creates several Federal mechanisms to assist 
States in performing their paternity and child support enforcement 
functions. These include use of the Internal Revenue Service (IRS), 
the Federal courts, and the FPLS. The Assistant Secretary must approve 
a State's application for permission to use the courts of  the United
States to enforce orders upon a finding that either another State has 
not enforced the court order of the originating State within a 
reasonable time or Federal courts are the only reasonable method of 
enforcing the order. Although Congress authorized the use of Federal 
courts to enforce interstate cases, this mechanism has gone unused, 
apparently because States view it as costly and complex.
	Finally, the CSE statute requires the establishment of a FPLS 
to be used to find absent parents in order to secure and enforce child 
support obligations. The role of the FPLS was expanded by the 1996
welfare reform law. For purposes of establishing parentage; 
establishing, setting the amount of, modifying, or enforcing child 
support obligations; or enforcing child custody or visitation; the FPLS 
is to provide information to locate any individual: (1) who is under an 
obligation to pay child support or provide child custody or visitation 
rights; (2) against whom such an obligation is sought; or (3) to whom 
such an obligation is owed. Upon request, the Secretary of HHS must 
provide to an authorized person the most recent address and place of 
employment of any noncustodial parent if the information is contained 
in the records of HHS or can be obtained from any other department or 
agency of the United States or of any State. Public Law 105-33, which 
was enacted in 1997 and made numerous changes to the 1996 welfare 
reform law, allows FPLS information to be disclosed to noncustodial 
parents except in cases where there is evidence of domestic violence 
or child abuse and the local court determines that disclosure may 
result in harm to the custodial parent or child. The Secretary also 
must make available the services of the FPLS to any State that wishes 
to locate a missing parent or child for the purpose of enforcing any 
Federal or State law involving the unlawful taking or restraint of a 
child or the establishment or maintenance of a child custody or 
visitation order.
	Historically, the Federal Government held the view that 
visitation (also referred to as child access) and child support should 
be legally separate issues, and that only child support should be 
under the purview of the CSE Program. Both Federal and State 
policymakers have maintained that denial of visitation rights should 
be treated separately and should not be considered a reason for 
stopping support payments. Nonetheless, Census Bureau data indicate 
that it was more likely for noncustodial parents to make payments of 
child support if they had either joint custody or visitation rights. 
Thus, in order to promote visitation and better relations between 
custodial and noncustodial parents, the 1996 welfare reform law 
provided $10 million per year for grants to States for access and 
visitation programs, including mediation, counseling, education, and 
supervised visitation. In addition, as mentioned above, the 1996 law 
also expanded the scope of the FPLS to allow certain noncustodial 
parents to obtain information regarding the location of the custodial 
parent.
	All States and territories applied for and received funding for 
access and visitation grants in fiscal year 2002. According to a 
preliminary report on the grant program (Office of Child Support, 
2002b), most participating individuals received parenting education,
help in developing parenting plans, and mediation services. Based on 
FY1999 data, nearly 47,000 individuals were served by the grant program
in its first year of operation.

THE STATE ROLE

The Social Security Act requires every State operating a TANF program 
to conduct a Child Support Enforcement program. Federal law requires 
applicants for, and recipients of, TANF to assign their support rights 
to the State in order to receive benefits. In addition, each applicant 
or recipient must cooperate with the State to establish the paternity 
of a child born outside marriage and to obtain child support payments.
	TANF recipients or applicants may be excused from the 
requirement of cooperation if the CSE agency determines that good 
cause for noncooperation exists, taking into consideration the best 
interests of the child on whose behalf aid is claimed. If good cause 
is found not to exist and if the relative with whom a child is living 
still refuses to cooperate, then the State must reduce the family's 
TANF benefit by at least 25 percent and may remove the family from 
the TANF program. (Federal law also stipulates that no TANF funds may 
be used for a family that includes a person who has not assigned 
child support rights to the State). Before the 1996 welfare reform law, 
cooperation could have been found to be against the best interests of 
the child if cooperation could be anticipated to result in physical or 
emotional harm to the child or caretaker relative; if the child was 
conceived as a result of incest or rape; or if legal procedures were 
underway for the child's adoption.
	Unlike previous law, the 1996 welfare reform law provides 
States rather than the Federal Government with the authority to define 
"good cause" The law now requires States to develop both "good cause" 
and "other exceptions" to the cooperation requirement. The only 
restriction is that both the  "good cause" and "other exceptions" 
must be based on the "best interests of the child."   In addition to 
defining good cause and other exceptions, States must establish the 
standard for proving a claim. States also will have to decide which 
State agency will inform TANF caretaker relatives about the 
cooperation exemptions, and which agency will make the decision about 
the validity of a given claim. These responsibilities can be delegated 
to the State TANF agency, the CSE agency, or the Medicaid agency.
	Each State is required to designate a single and separate 
organizational unit of State government to administer its child 
support program. Earlier child support legislation, enacted in 1967, 
had required that the program be administered by the welfare agency. 
The 1975 act deleted this requirement in order to give each State 
the opportunity to select the most effective administrative mechanism. 
Most States have placed the child support agency within a social or 
human services umbrella agency which also administers the TANF program.
However, Alaska, Arkansas, Florida, and Massachusetts have placed the 
agency in the department of revenue and Guam, Hawaii, Texas, and the 
Virgin Islands have placed the agency in the office of the attorney 
general. The law allows the programs to be administered either at the 
State or local level. Ten programs are locally administered. A few 
programs are State administered in some counties and locally 
administered in others.
	States must have plans, approved by the director of OCSE, 
which set forth  the details of their child support program. States 
also must enter into cooperative arrangements with courts and law 
enforcement officials to assist the child support agency in 
administering the program. These agreements may include provision for 
reimbursing courts and law enforcement officials for their assistance. 
States also must operate a parent locator service to find absent 
parents, and they must maintain full records of collections and 
disbursements and otherwise maintain an adequate reporting system.
	In order to facilitate the collection of support in interstate
cases, a State must cooperate with other States in establishing 
paternity, locating absent parents, and securing compliance with an 
order issued by another State.
	States are required to use several enforcement tools. They must
use the IRS tax refund offset procedure for welfare and nonwelfare 
families, and they also must determine periodically whether any 
individuals receiving unemployment compensation owe child support. The 
State Employment Security Agency (part of the Federal-State 
Unemployment Compensation System), is required to withhold 
unemployment benefits, and to pay the child support agency any 
outstanding child support obligations established by an agreement with 
the individual or through legal processes.
	Other enforcement techniques States must use include:
1.  Imposing liens against real and personal property for amounts of 
	overdue 	support;
2. Withholding State tax refunds payable to a parent who is delinquent 
in support payments; 
3.	Reporting the amount of overdue support to a consumer credit 
bureau upon request;
4.	Requiring individuals who have demonstrated a pattern of 
delinquent payments to post a bond or give some other guarantee to 
secure payment of overdue support;
5.	Establishing expedited processes within the State judicial 
system or under administrative processes for obtaining and enforcing 
child support orders and determining paternity. These expedited 
procedures include giving States authority to secure assets to satisfy 
payment of past-due support by seizing or attaching unemployment
compensation, workers' compensation, judgments, settlements, lotteries,
assets held in financial institutions, and public and private retirement 
funds;
6.	Withholding, suspending, or restricting the use of driver's 
licenses, professional and occupational licenses, and recreational 
and sporting licenses of noncustodial parents who owe past-due support;
7.	Denying passports to persons owing more than $5,000 in past-due 
support;
8.	Requiring unemployed noncustodial parents who owe child support
to a child receiving TANF benefits to participate in appropriate work 
activities;
9.	Performing quarterly data matches with financial institutions; 
and
10. 	Voiding fraudulent transfers of assets to avoid payment of 
child support. 
	Each State's plan must provide that the child support agency 
will attempt to secure support for all TANF children. The State also 
must provide in its plan that it will undertake to establish the 
paternity of a TANF child born out of wedlock. These requirements apply 
to all cases except those in which the State finds, in accordance with 
standards established by the Secretary of HHS, the best interests of 
the child would be violated. For families whose TANF eligibility ends 
due to the receipt of or an increase in child support, States must 
continue to provide CSE services without imposing the application fee.
	Foster care agencies are required to take steps, where 
appropriate, to secure an assignment to the State of any rights to 
support on behalf of a child receiving foster care maintenance 
payments under title IV-E of the Social Security Act. State child 
support agencies also are required to petition to include medical 
support as part of any child support order whenever health care 
coverage is available to the noncustodial parent at a reasonable cost. 
And, if a family loses TANF eligibility as the result of increased 
collection of support payments, the State must continue to provide 
Medicaid benefits for 4 calendar months beginning with the month of 
ineligibility. In addition, States must provide services to families 
covered by Medicaid who are referred to the State IV-D agency from 
the State Medicaid agency.
	With respect to non-TANF families, States must provide, once 
an application is filed with the State agency, the same child support
collection and paternity determination services which are provided 
for TANF families. The State must charge non-TANF families an 
application fee of up to $25. States may charge the fee against the 
custodial parent, pay the fee out of State funds, or recover it from 
the noncustodial parent.
	States also have the option of charging a late payment fee 
equal to between 3 and 6 percent of the amount of overdue support. 
Late payment fees may be charged to noncustodial parents and are to 
be collected only after the full amount of the support has been paid 
to the child. States also may recover costs in excess of the 
application fee from either the custodial or noncustodial parent. If
a State chooses to make recovery from the custodial parent, it must 
have in effect a procedure whereby all persons in the State who have 
authority to order support are informed that such costs are to be 
collected from the custodial parent.
	Child support enforcement services must include the 
enforcement of spousal support, but only if a support obligation has 
been established with respect to the spouse, the child and spouse are 
living in the same household, and child support is being collected 
along with spousal support.  Finally, each State must comply with 
any other requirements and standards that the Secretary of HHS 
determines to be necessary to the establishment of an effective 
child support program.

THE CHILD SUPPORT ENFORCEMENT PROCESS

The goal of the child support program is to combine these Federal and 
State responsibilities and activities into an efficient process that
provides seven basic services: locating absent parents, establishing 
paternity, establishing child support orders, reviewing and modifying 
orders, establishing and enforcing medical support, collecting and 
distributing support, and enforcing child support across State lines. 
Each of these services deserves extensive discussion.

LOCATING ABSENT PARENTS

In pursuing cases, child support officials try to obtain a great deal
of information and several documents from the custodial parent or other 
sources. These include the name and address of the noncustodial parent; 
the noncustodial parent's Social Security number (SSN); children's 
birth certificates; the child support order; the divorce decree or 
separation agreement; the name and address of the current or most 
recent employer of the noncustodial parent; the names of friends 
and relatives or organizations to which the noncustodial parent might
belong; information about income and assets; and any other information
about noncustodial parents that might help locate them. Once this 
information is provided, it is used in strictest confidence.
	If the Child Support Enforcement program cannot locate the 
noncustodial parent with the information provided by the custodial 
parent, it must try to locate the noncustodial parent through the 
State parent locator service. The State uses various information 
sources such as telephone directories, motor vehicle registries, 
tax files, and employment and unemployment records. The State also 
can ask the FPLS to locate the noncustodial parent. The FPLS can 
access data from the Social Security Administration, the IRS, the 
Selective Service System, the Department of Defense, the Veterans
Administration, the National Personnel Records Center, and State 
Employment Security Agencies. The FPLSprovides SSNs, addresses, 
and employer and wage information to State and local child support 
agencies to establish and enforce child support orders.
	The FPLS obtains employer addresses and wage and unemployment 
compensation information from the State employment security agencies. 
This information is very useful in helping child support officials 
work cases in which the custodial parent and children live in one 
State and the noncustodial parent lives or works in another State. 
Employment data are updated quarterly by employers reporting to their 
State employment security agency; unemployment data are updated 
continually from State unemployment compensation payment records.
The FPLS conducts weekly or biweekly matches with most of the agencies 
listed above. Each agency runs the cases against its data base and the 
names and SSNs that match are returned to FPLS and through FPLS to the 
requesting State or local child support office. During fiscal year 
2001, the FPLS sent employment and address information to States on 
more than 4.8 million noncustodial parents and putative fathers.
	Since October 1984, OCSE has participated in Project 1099 which 
provides State child support agencies access to all of the earned and 
unearned income information reported to IRS by employers and financial 
institutions. Project 1099, named after the IRS form on which both 
earned and unearned income is reported, is a cooperative effort 
involving State child support agencies, the OCSE, and the IRS. Examples
of reported earned and unearned incomes include: interest paid on 
savings accounts, stocks and bonds, and distribution of dividends and 
capital  gains; rent or royalty payments; prizes, awards, or winnings; 
fees paid to directors or subcontractors; and unemployment 
compensation. The Project 1099 information is used to locate 
noncustodial parents and to verify income and employment. Project 
1099 also helps locate additional nonwage income and assets of 
noncustodial parents who are employees as well as income and asset 
sources of self-employed and nonwage earning obligors. Project 1099 
operations were suspended in 2002 as a result of escalating IRS costs 
for Project 1099 processing.  OCSE indicated that given the benefits of 
the National Directory of New Hires and the Financial Institution Data 
Match program, States should re-evaluate their continuing need to
obtain Project 1099 information and, if appropriate, revise the 
criteria they use to select cases for Project 1099 requests.  OCSE 
recommended that cases not be submitted for Project 1099 matching 
until National Directory of New Hires and Financial Institution Data 
Match program comparisons were conducted and any hits received are 
reviewed for action.  OCSE indicated that it would continue to analyze 
the costs and benefits of the Project 1099 data (OSCE, 2002a).
	The SSN is the key piece of information around which the 
child support information system is constructed. Most computer 
searches need the SSN in order to operate effectively. Thus, in the 
1996 welfare reform law and the amendments in the 1997 Balanced Budget 
Act (Public Law 105-33), Congress gave CSE agencies access to new 
sources for obtaining SSNs. Federal CSE law required States to 
implement procedures requiring that the SSN of any applicant for a 
professional, driver's, occupational, recreational, or marriage 
license be recorded on the application (but not on the face of the 
license itself). In addition, the 1996 law required that the SSN of 
any individual subject to a divorce decree, support order, or paternity 
determination or acknowledgment be placed in the records relating to 
the matter and that the SSN of any individual who has died be placed 
in the death records and recorded on the death certificate.
	To further improve CSE's ability to locate absent parents, the 
1996 law also required States to have automated registries of child 
support orders containing records of each case in which CSE services 
are being provided and each support order established or modified on 
or after October 1, 1998. Local registries could be linked to form 
the State registry. The State registry includes a record of the support 
owed under the order, arrearages, interest or late penalty charges, 
amounts collected, amounts distributed, child's date of birth, and any
liens imposed. The registry also includes standardized information on 
both parents, such as name,  SSN, date of birth, and case 
identification number.


In one of the most important child support reforms in recent years, the  
1996 law required States, by October 1, 1997, to establish an automated 
directory of new hires containing information from employers, including 
Federal, State, and local governments and labor organizations, for each
newly hired employee. The directory must include the name, address and 
SSN of the employee and the employer's name, address, and tax 
identification number. This information is to be supplied by employers 
to the State new hires directory within 20 days after the employee is 
hired. Within 3 business days after receipt of new hire information, 
the State directory of new hires is required to furnish the information 
to the National directory of new hires. The 1996 law also required the 
establishment of a Federal Case Registry of child support orders and a 
National Directory of New Hires. The Federal directories consist of
abstracts of information from the State directories  and are located 
in the FPLS. According to HHS, during fiscal year 2000 more than 
642 million records were posted to the National Directory of New Hires, 
which matches child support orders to employment records.  The Federal 
Case Registry maintained records involving more than 30 million 
individuals.  The National Directory of New Hires information is 
compared with the Federal Case Registry to locate individuals who are 
involved in child support cases and live in a different State than 
their children.  In fiscal year 2001, over 4 million noncustodial 
parents and putative fathers were located through the National 
Directory of New Hires.
	The 1996 reforms allow all States to link up to an array of 
data bases and permits the FPLS to be used for the purpose of 
establishing parentage; establishing, setting the amount of, 
modifying, or enforcing child support obligations; or enforcing 
child custody or visitation orders. By May 1, 1998, a designated State 
agency must directly or by contract conduct automated comparisons of 
the SSNs reported by employers to the State directory of new hires and 
the SSNs of CSE cases that appear in the records of the State registry 
of child support orders. The Secretary of HHS is required to conduct 
similar comparisons of the Federal directories. When a match occurs, 
the State directory of new hires is required to report to the State CSE 
agency the name, date of birth, and SSN of the employee, and the name, 
address, and identification number of the employer. The CSE agency must,
within 2 business days, instruct appropriate employers to withhold child 
support obligations from the employee's paycheck, unless the employee's 
income is not subject to withholding.

	There are two exceptions to the immediate income withholding 
rule: (1) if one of the parties demonstrates, and the court (or 
administrative process) finds,  that there is good cause not to 
require immediate withholding; or (2) if both parties agree in writing 
to an alternative arrangement. Employers must remit to the State 
disbursement unit income withheld within 7 business days after the 
employee's payday. States also are required to operate a centralized
collection and disbursement unit that sends child support payments 
to custodial parents within 2 business days.







ESTABLISHING PATERNITY

Paternity establishment is a prerequisite for obtaining a child 
support order. In 2002, 33.8 percent of children born in the United 
States were born to unmarried women. According to the OCSE, in fiscal 
year 2002 paternity was established for about 74 percent of the 
children who needed paternity established. Nonetheless, the CSE 
Program has made great strides in establishing paternity. Between 1994
and 2002, the number of paternities established or acknowledged 
increased from 592,000 to 1.5 million, a jump of about 156 percent.

Experts agree that the CSE Program must continue to improve paternity 
establishment. Without paternity established, children have no legal 
claim on their fathers' income. In addition to financial benefits, 
establishing paternity can provide social, psychological, and emotionl 
benefits and in some cases the father's  medical history may be needed 
to give a child proper care. 

In the 1980s, legislation was enacted that contained provisions aimed 
at increasing the number of paternities established. Public Law 98-378, 
the Child Support Enforcement Amendments of 1984, required States to 
implement laws  that permitted paternity to be established until a 
child's 18th birthday. Under the Family Support Act of 1988 (Public 
Law 100-485), States are required to initiate the establishment of 
paternity for all children under the age of 18, including those for 
whom an action to establish paternity was previously dismissed because 
of the existence of a statute of limitations of less than 18 years. 
The 1988 law encouraged States to create simple civil procedures for 
establishing paternity in contested  cases, required States to have 
all parties in a contested paternity case take a genetic test upon the 
request of any party, required the Federal Government to pay  90 
percent of the laboratory costs of these tests, and permitted States 
to charge persons not receiving Aid to Families with Dependent 
Children (AFDC) for the cost of establishing paternity. The 1988 
law also set paternity establishment standards for the States and 
stipulated that each State was required, in administering any law 
involving the issuance of birth certificates, to require both parents 
to furnish their SSN unless the State found good cause for not doing 
so. 

Congress took additional action to improve paternity establishment 
in the Omnibus Budget Reconciliation Act of 1993. This law required 
States to have in effect, by October 1, 1993, the following:
1.  A simple civil process for voluntarily acknowledging paternity 
under which the State must explain the rights and responsibilities of 
acknowledging paternity and afford due process safeguards. Procedures 
must include a hospital-based program for the voluntary acknowledgment 
of paternity during the period immediately preceding or following the 
birth of a child;
2.  A law under which the voluntary acknowledgment of paternity creates 
a rebuttable, or at State option, conclusive presumption of paternity, 
and under which such voluntary acknowledgments are admissible as 
evidence of paternity;
3.  A law under which the voluntary acknowledgment of paternity must be 
recognized as a basis for seeking a support order without requiring any 
further proceedings to establish paternity;


4.  Procedures which provide that any objection to genetic testing 
results must be made in writing within a specified number of days 
prior to any hearing at which such results may be introduced in 
evidence; if no objection is made, the test results must be admissible 
as evidence of paternity without the need for foundation testimony or 
other proof of authenticity or accuracy;
5.  A law which creates a rebuttable or, at the option of the State, 
conclusive presumption of paternity upon genetic testing results 
indicating a threshold probability of the alleged father's being the
father of the child;
6.  Procedures which require default orders in paternity cases upon a 
showing that process has been served on the defendant and whatever 
additional showing may be required by State law; and
7.  Expedited processes for paternity establishment in contested cases 
and  full faith and credit to determinations of paternity made by 
other States.
The 1993 reforms also revised the mandatory paternity establishment 
requirements imposed on States by the Family Support Act of 1988. The 
most notable provision increased the mandatory paternity establishment 
percentage, which was backed up by financial penalties linked to a 
reduction of Federal matching funds for the State's AFDC (now TANF) 
Program (see Audits and Fnancial Penalties section). The welfare 
reform law of 1996 further strengthened the Nation's paternity 
establishment system. More specifically, the 1996 law streamlined the 
paternity determination process; raised the paternity establishment 
requirement from 75 to 90 percent; implemented a simple civil process 
for establishing paternity; required a uniform affidavit to be 
completed by men voluntarily acknowledging paternity and entitled 
such affidavit to full faith and credit in any State; stipulated that 
a signed acknowledgment of paternity be considered a legal finding of 
paternity unless rescinded within 60 days and thereafter may be 
challenged in court only on the basis of fraud, duress, or material 
mistake of fact; and provided that no judicial or administrative action 
is needed to ratify an acknowledgment that is not challenged. The new 
law also required States to publicize the availability and encourage 
the use of procedures for voluntary establishment of paternity and 
child support.
Paternity acknowledgments must be filed with the State birth records 
agency. However, before a mother or alleged father can sign a 
paternity acknowledgment, each must be given notice (both orally 
and in writing) of the alternatives to, legal consequences of, and 
rights and responsibilities arising from the signed acknowledgment. 
Moreover, in the case of unmarried parents, the father's name shall 
not appear on the birth certificate unless he has signed a voluntary 
acknowledgment or a court has issued an adjudication of paternity.


While employing these laws and procedures to establish paternity, 
States follow a predictable sequence of events. In cases for which
paternity is not voluntarily acknowledged, the child support agency 
locates the alleged father and brings him to court or before an
administrative agency where he can either acknowledge or dispute 
paternity. If he claims he is not the father, the court can require 
that he submit to parentage blood testing to establish the probability
that he is the father. If the father denies paternity, a court usually 
decides the issue based on scientific and testimonial evidence. 
Through the use of testing techniques, a man may be excluded as a 
possible natural father, in which case no further action against him 
is warranted. Most States use one or more of several scientific methods 
for establishing paternity. These include: ABO blood typing system,
human leukocyte antigen testing, red cell enzyme and serum protein 
electrophoresis, and deoxyribonucleic acid (DNA) testing.
The State CSE agency has the power (without the need for permission 
from a court or administrative tribunal) to order genetic tests in 
appropriate CSE cases. These CSE agencies also must recognize and 
enforce the ability of other State CSE agencies to take such actions. 
Moreover, genetic test results must be admissible as evidence so long
as they are of a type generally acknowledged as reliable by 
accreditation bodies recognized by the U.S. Department of Health and 
Human Services (HHS) and performed by an entity approved by such an 
accredited body. Finally, in any case in which the CSE agency ordered 
the tests, the State must pay the initial costs. The State is allowed 
to recoup the cost from the father if paternity is established. If the 
original test result is contested, further testing can be ordered 
by the CSE agency if the contestant pays the cost in advance.
There are two types of testing procedures for paternity cases: (1) 
probability of exclusion tests, and (2) probability of paternity tests.
Most laboratories perform probability of exclusion tests. This type of 
testing can determine with 90-99 percent accuracy that a man is "not" 
the father of a given child. There is a very high probability the test 
will exonerate a falsely accused man (Office of Child Support 
Enforcement, 1990).
Since the question of paternity is essentially a scientific one, it is 
important that the verification process include available advanced 
scientific technology. Experts now agree that use of the highly 
reliable DNA test greatly increases the likelihood of correct 
identification of putative fathers. DNA tests can be used either 
to exclude unlikely fathers or to establish a high likelihood that a 
given man is the father (Office of Child Support Enforcement, 1990, 
see pp. 59-74). One expert, speaking at a child support conference, 
summed up the effectiveness of DNA testing as follows:


The DNA fingerprinting technique promises far superior reliability 
than current blood grouping or human leukocyte antigen analyses. The 
probability of an unrelated individual sharing the same patterns is 
practically zero. The "DNA fingerprinting'' test, developed in England 
in 1985, refines the favorable statistics to an even greater degree, 
reducing the probability that two unrelated individuals will have the 
same DNA fingerprint to one in a quadrillion (Georgeson, 1989, p. 568).  

If the putative father is not excluded on the basis of the scientific 
test results, authorities may still conclude on the basis of 
witnesses, resemblance, and other evidence that they do not have 
sufficient evidence to establish paternity and, therefore, will drop 
charges against him. Tests resulting in nonexclusion also may serve 
to convince the putative father that he is, in fact, the father. If 
this occurs, a voluntary admission often leads to a formal court order. 
When authorities believe there is enough evidence to support the 
mother's allegation, but the putative father continues to deny the 
charges, the case proceeds to a formal adjudication of paternity in a 
court of law (McKillop, 1981, pp. 22-23). Using the results of the 
blood test and other evidence, the court or the child support agency, 
often through an administrative process, may dismiss the case or enter 
an order of paternity, a prerequisite to obtaining a court order 
requiring a noncustodial parent to pay support (U.S. General Accounting 
Office, 1987).
	In recent years, a new phenomenon has occurred in the 
paternity establishment area called the "disestablishment" of 
paternity. New genetic testing capabilities have made identification 
of a biological father more accurate than ever before, prompting some 
parties to attempt to overcome presumptions or previous determinations 
of paternity by using genetic test results (OCSE, 2002c). During the 
last several years, advances in genetic testing have resulted in more 
instances of putative fathers substantiating their claim that they in 
fact are not the biological father of the child in question.  In 
divorce cases in which the mother contends that her husband is not 
the father of her child and genetic tests verify her claim, but the 
husband nevertheless wants to maintain a parent-child relationship and 
continue the emotional and financial responsibilities of fatherhood,
many courts considering the best interests of the child and the public 
have ruled in the ex-husbands favor, arguing that there is more to 
fatherhood than biology.  In divorce cases in which the husband 
alleges that children of the marriage are not his and can substantiate
his allegation with genetic testing results, some courts have ruled on 
behalf of the ex-husband, arguing that it is not fair to force a man to 
assume responsibility for a child to whom he has no biological 
connection.  Other courts have not allowed husbands to raise the 
paternity issue at divorce, especially  if the husband suspected
adultery and failed to act, contending that it would not be in the 
best interest of the child or the public. Outcomes of such paternity 
disestablishment cases are varied among jurisdictions; so far, no 
national consensus has emerged.
In fiscal year 2002, 1,527,103 paternities were established or 
acknowledged.  For the second time, paternity acknowledgments exceeded 
paternity establishments. In fiscal year 2002, 697,115 paternities were
established or acknowledged through the CSE agencies and 829,988 
paternities were acknowledged primarily through hospitals (see 
Table 8-1). While the percentage of children in the Child Support 
Enforcement program for whom paternity was established or acknowledged 
averaged 74.3 percent nationally in 2002, huge disparities exist among 
States. For example, the percentage of children in the CSE program for 
whom paternity was established or acknowledged in 2002 ranged from 32.4 
percent in the District of Columbia to 101.2 percent in Utah (some 
paternities established are for children born in previous years).


ESTABLISHING ORDERS

A child support order legally obligates noncustodial parents to 
provide financial support for their children and stipulates the amount
of the obligation (current weekly obligation plus arrearages, if any) 
and howit is to be paid. Many States have statutes that provide that, 
in the absence of a child support award, the payment of Temporary 
Assistance for Needy Families (TANF) benefits to the child of a 
noncustodial parent creates a debt due from the parent or parents 
in the amount of the TANF benefit. Other States operate under the 
common law principle, which maintains that a father is obligated to 
reimburse any person who has provided his child with food, shelter, 
clothing, medical attention, or education. States can establish 
child support obligations either by judicial or administrative 
process.

Judicial and administrative systems
The courts have traditionally played a major role in the child support 
program. Judges establish orders, establish paternity, and provide 
authority for all enforcement activity. The child support literature 
generally concludes that the judicial process offers several 
advantages, especially by providing more adequate protection for the 
legal rights of the noncustodial parent and by offering a wide range 
of enforcement remedies, such as civil contempt and possible 
incarceration. A major problem of using courts, however, is that 
they are often cumbersome, expensive, and time consuming.
Thus, the advantages of an administrative process are very compelling. 
These include offering quicker service because documents do not have to 
be filed with the court clerk nor await the signature of the judge, 
eliminating time consuming problems in scheduling court appearances, 
providing a more uniform and  consistent obligation amount, and saving
money because of reduced court costs and attorney fees.


The 1984 child support amendments required States to limit the role of 
the courts significantly by implementing administrative or judicial 
expedited processes. States are required to have quasi-judicial or 
administrative systems to expedite the process for obtaining and 
enforcing a support order. Since 1993, States have been required to 
extend these expedited processes to paternity establishment.

Most child support officials view the growth of expedited 
administrative processes as an improvement in the child support 
program. An expedited judicial process is a legal process in effect 
under a State's judicial system that reduces the processing time of 
establishing and enforcing a support order. To expedite case 
processing, a "judge surrogate" is given authority to: take testimony 
and establish a record, evaluate and make initial decisions, enter 
default orders if the noncustodial parent does not respond to "notice" 
or other State "service of process" in a timely manner, accept 
voluntary acknowledgment of support liability and approve stipulated 
agreements to pay support. In addition, if the State establishes 
paternity using the expedited judicial process, the surrogate can 
accept voluntary acknowledgment of paternity. Judge surrogates are 
sometimes referred to as court masters, referees, hearing officers, 
commissioners, or presiding officers.

The purpose of an expedited administrative process is to increase 
effectiveness and meet specified processing times in child support 
cases and paternity actions. Federal regulations specify that 90 
percent of cases must be processed within 3 months, 98 percent within 
6 months, and 100 percent within 12 months.

The Federal regulations also contain additional requirements related 
to  the expedited process. Proceedings conducted pursuant to either 
the expedited judicial or expedited administrative process must be 
presided over by an individual who is not a judge of the court. 
Orders established by expedited process must have the same force 
and effect under State law as orders established by full judicial 
process, although either process may provide that a judge first 
ratify the order. Within these broad limitations, each State is 
free to design an expedited process that is best suited to its 
administrative needs and legal traditions.Under the 1996 welfare 
reform law, the expedited procedure rules were broadened to cover 
modification of support orders. The new law also required that
State tribunals--whether quasijudicial or administrative--must 
have statewide jurisdiction over the parties and permit intrastate 
case transfers from one tribunal to another without the need to 
refile the case or reserve the respondent. In addition, once a 
support/paternity order is entered, the tribunal must require 
each party to  file and periodically update certain information with 
both the tribunal and the State's child support case registry. This 
information includes the parent's SSN, residential and mailing 
addresses, telephone number, driver's license number, and employer's 
name, address, and telephone number.

Moreover, the 1996 reforms required States to adopt laws that give 
the CSE agency authority to initiate a series of expedited procedures 
without the necessity  of obtaining an order from any other 
administrative agency or judicial tribunal. These actions include: 
ordering genetic testing; issuing subpoenas; requiring public and 
private employers and other entities to provide information on 
employment, compensation, and benefits or be subject to penalties; 
obtaining access to vital statistics, State and local tax records, 
real and personal property records, records of occupational and 
professional licenses, business records, employment security  and 
public assistance records, motor vehicle records, corrections records, 
customer records of utilities and cable television companies pursuant 
to an administrative subpoena, and records of financial institutions; 
directing the obligor to make payments to the child support agency in
public assistance or income withholding cases; ordering income 
withholding; securing assets to satisfy judgments and settlements; and
increasing the monthly support due to make payments on arrearages.

Determining the amount of support orders
Before October 1989, the decision of how much a parent should pay for 
child support was left primarily to the discretion of the court. 
Typically, judges examined financial statements from mothers and 
fathers and established awards based on children's needs. The 
resulting awards varied greatly. Moreover, this case-by-case approach
resulted in very low awards. As late as 1991, the average amount of 
child support received by custodial parents was $2,961, less than 
$250 per month.

In an attempt to increase the use of objective criteria, the 1984 
child support amendments required each State to establish, by October
1987, guidelines for determining child support award amounts "by law 
or by judicial or administrative action"  and to make the guidelines 
available "to all judges and other officials who have the power to 
determine child support awards within the State."  Federal 
regulations made the provision more specific: State child support 
guidelines must be based on specific descriptive and numeric
criteria and result in a computation of the support obligation. 
The 1984 provision did not make the guidelines binding on judges and 
other officials who had the authority to establish child support 
obligations. However, the Family Support Act of 1988 required States 
to pass legislation making the State child support guidelines a 
"rebuttable presumption" in any judicial or administrative proceeding 
and establishing the amount of the order which results from the 
application of the State- established guidelines as the correct amount
to be awarded. 

By requiring the States to establish child support guidelines, the 
Federal Government hoped to accomplish four main goals, each goal 
corresponding to the perceived problems of the common law method of 
determining child support: (1) increase the adequacy of child support 
awards; (2) increase the consistency and predictability of child 
support awards; (3) increase compliance through perceived fairness of 
child support awards; and (4) increase the ease of administration of  
child support cases (Morgan, 1996).

States generally use one of three basic types of guidelines to 
determine award amounts: "Income shares," which is based on the 
combined income of both parents (34 States); "percentage of income," 
in which the number of eligible children is used to determine a 
percentage of the noncustodial parents' income to be paid in child 
support (12 States); and "Melson-Delaware," which provides a minimum 
self-support reserve for parents before the cost of rearing the 
children is prorated between the parents to determine the award amount 
(Delaware, Hawaii, West Virginia). Two jurisdictions (the District of
Columbia and Massachusetts) use variants of one or more of these three  
approaches(Williams, 1994; www.supportguidelines.com/links.html; see 
Table 8-23 below).

The income shares approach is designed to ensure that the children of 
divorced parents suffer the lowest possible decline in standard of 
living. The approach is intended to ensure that the child receives 
the same proportion of parental income that he would have received 
if the parents lived together. The first step in the income shares 
approach is to determine the combined income of the two parents. A 
percentage of that combined income, which varies by income level, is 
used to calculate a "primary support obligation." The percentages 
decline as income rises, although the absolute amount of the primary 
support obligation increases  with income. Many States add child care 
costs and extraordinary medical expenses to the primary support 
obligation. The resulting total child support obligation is 
apportioned between the parents on the basis of their incomes. The 
noncustodial parent's share is the child support award (Office of 
Child Support, 1987, pp. II 67-80).

Proponents of the income shares approach note that it reflects the 
economic presumption that as income increases, the percentage of 
income devoted to child care decreases, and explicitly considers the 
income of both parents in determining the support of the child.  They 
claim that the income share approach, more easily than the flat 
percentage model, can take into consideration adjustments for shared 
and split custody, health care needs, child care expenses, serial 
family development, and children's ages by the manipulation of income, 
add-ons and deductions and by then allocating these costs between the 
parents. Because these factors can be built into the income shares 
formula, there is less reason for deviation from the guideline's 
presumptive award. Limiting deviation meets the ideal of perceived 
fairness, as well as the Federal requirement that the number of cases 
in which deviation is granted be limited. Limited deviation also meets 
the goals of consistency and predictability. Given that the ultimate 
goal of child support guidelines is increased compliance through 
perceived fairness, the income shares approach meets this goal 
(Morgan, 1996).   

The percentage of income approach is based on the noncustodial 
parent's gross income and the number of children to be supported 
(the child support obligation is not adjusted for the income of the 
custodial parent). The percentages vary by State. In Wisconsin, 
child support is based on the following proportions of the 
noncustodial parent's gross income: one child--17 percent; two 
children-- 25 percent; three children--29 percent; four children--
31 percent; and five or more children--34 percent. There is no self 
support reserve in this approach nor is there separate treatment for 
child care or extraordinary medical expenses. The States  that use a 
percentage of income approach are Alaska, Arkansas, Georgia, Illinois, 
Iowa, Minnesota, Mississippi, Nevada, New York, North Dakota, 
Tennessee, Texas, and Wisconsin.

Proponents of the percentage of income approach contend that it is 
simpler, easier to learn, easier to explain, easier to computerize, 
and less prone to error. They note that although the percentage of 
income approach does not consider the custodial parent's income, 
neither does it impute income to the custodial parent (Morgan, 1996, 
Child Support Guidelines: Interpretation and Application).  

The Melson-Delaware formula starts with net income. After 
determining net income for each parent, a primary support allowance 
is subtracted from each parent's income. This reserve represents the 
minimum amount required for adults to meet their own subsistence 
requirements. The next step is to determine a primary support amount 
for each dependent child. Work-related child care expenses and 
extraordinary medical expenses are added to the child's primary 
support amount. The child's primary support needs are then apportioned
between the parents. To ensure that children share in any additional 
income the parents might have, a percentage of the parents' remaining
income is allocated among the children (the percentage is based on the 
number of dependent children). The States that use the Melson-Delaware 
approach are Delaware, Hawaii, and West Virginia. 

Proponents of the Melson-Delaware approach claim that it is fairer 
than the other approaches because it is internally consistent. They 
contend that it takes into consideration not only special custody 
arrangements and health care needs, but each parent's needs as well.  
They maintain that the Melson-Delaware approach is consistent and 
predictable and not as complex as it appears at first glance (Morgan, 
1996).

Pirog, Klotz, and Buyers (1997) have examined the differences in
child support guidelines across States. Their approach was to define 
five hypothetical cases of custodial mothers and noncustodial fathers 
that capture a range of differences in income, expenses, and other 
factors that influence the amount of child support payments computed 
under the guidelines adopted by the various States. State 1997 
guidelines were then applied to each of the five cases to compute 
the amount of child support that would be due. In each of the five 
cases, the mother and father are divorced. The father lives alone 
while the mother lives with the couples' two children, ages 7 and 13. 
The father pays union dues of $30 per month and health insurance for 
the children of $25 per month. The mother incurs monthly 
employment-related child care expenses of $150. The monthly income 
of the fathers and mothers is:

Case A: father--$530; mother--$300
Case B: father--$720; mother--$480
Case C: father--$2,500; mother--$1,000
Case D: father--$4,400; mother--$1,760
Case E: father--$6,300; mother--$4,200.

Arguably, the most striking generalization that emerges from Table 
8-2 is the remarkable differences across States in the amount of the 
child support obligation established by the guidelines, particularly 
at the lower income levels. 

There is some agreement that there is no 
evidence that any one approach is superior to any other approach in 
terms of achieving the goals of increased compliance, consistency 
and predictability, and ease of administration. However, there is 
some evidence concerning adequacy of awards. One study indicates that
the income shares model produces the highest awards for low-income 
families, the Melson-Delaware model produces the highest award for 
middle-income families, and the percentage of income model produces 
the highest awards in upper-income families (Morgan, 1996).

Award rates
In 2002, of the 13.5 million custodial parents of children under the 
age of 21 whose other parent was not living in the household, only 
7.9 million or 59 percent had a child support award. Of all custodial 
parents, 84 percent were mothers and 16 percent were fathers.  About
63 percent of custodial mothers and 39 percent of custodial fathers 
had child support awards. About 40 percent of the 5.9 million custodial 
parents without awards chose not to pursue a child support award. In 
other cases, custodial parents were unable to locate the noncustodial 
parent, had a nonlegal agreement with the noncustodial parent, or 
believed that the noncustodial parent was unable to pay.
Never-married custodial parents were the group least likely to have 
a child support award. Only 52 percent of never-married custodial 
mothers had support awards compared with 72 percent of divorced
custodial mothers. Moreover, black custodial mothers and custodial 
mothers of Hispanic origin were much less likely than their white 
counterparts to have child support awards. About 67 percent of whites
had child support awards, compared with 54 percent of blacks and 
52 percent of Hispanics (U.S. Census Bureau, 2003).

Unresolved issues
As noted by Garfinkel, Melli, and Robertson (1994), there are a host 
of controversial issues associated with child support awards. These 
include whether child care costs, extraordinary medical expenses, and 
college costs are taken into account in determining the support order; 
how the income of the noncustodial parent is allocated between first 
and subsequent families;/3/ how the income of stepparents is treated; 
whether a minimum child support award level regardless of age or 
circumstance of the noncustodial parent should be imposed; and the 
duration of the support order (i.e., does the support obligation end 
when the child reaches age 18; what happens to arrearages). 

/3/Traditionally, the courts have taken the position that the father's 
prior child support obligations take absolute precedence over the 
needs of the new family. They have disregarded the father's plea that 
his new responsibilities are a Achange in circumstance@ justifying a 
reduction in a prior child support award or at east averting an 
increase.

TABLE 8-2--AMOUNT OF CHILD SUPPORT AWARDED BY STATE GUIDELINES IN 
VARIOUS CASES


[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

REVIEWING AND MODIFYING ORDERS

	Without periodic modifications, child support obligations can 
become inadequate and inequitable. Historically, the only way to 
modify a child support order was to require a party to petition the
court for a modification based on a "change in circumstances."  What 
constituted a change in circumstances  sufficient to modify the order 
depended on the State and the court. The person requesting 
modification was responsible for filing the motion, serving notice, 
hiring a lawyer, and proving a change in circumstances of sufficient 
magnitude to satisfy statutory standards. The modification proceeding 
was a two step process. First the court determined whether a 
modification was appropriate. Next, the amount of the new obligation
was determined.
	Because this approach to updating orders was so cumbersome, 
the Family Support Act of 1988 required States both to use guidelines 
as a rebuttable presumption in all proceedings for the award of child 
support and to review and adjust child support orders in accordance 
with the guidelines. These provisions reflected congressional intent 
to simplify the updating of support orders by requiring a process in 
which the standard for modification was the State child support 
guidelines. They also reflect a recognition that the traditional 
burden of proof for changing the amount of the support order was a 
barrier to updating. Finally, the 1988 law signaled a need for States 
to at least expand, if not replace, the traditional "change in 
circumstances" test as the legal prerequisite for updating support 
orders by making State guidelines the presumptively correct amount of 
support to be paid (Federal Register, 1992, p. 61560).

The Family Support Act also required States to review guidelines at 
least once every 4 years and have procedures for review and adjustment 
of orders, consistent with a plan indicating how and when child 
support orders are to be reviewed and adjusted. Review may take place 
at the request of either parent subject to the order or at the request 
of a State child support agency. Any adjustment to the award must be 
consistent with the State's guidelines, which must be used as a 
rebuttable presumption in establishing or adjusting the support order. 
The Family Support Act also required States to review all orders being
enforced under the child support program within 36 months after 
establishment or after the most recent review of the order and to 
adjust the order in accord with the State's guidelines.

Review is required in child support cases in which support rights are 
assigned to the State, unless the State has determined that review 
would not be in the best interests of the child and neither parent 
has requested a review. This provision applies to child support 
orders in cases in which benefits under the TANF, foster care, or 
Medicaid Programs are currently being provided, but does not include 
orders for former TANF, foster care, or Medicaid cases, even if the 
State retains an assignment of support rights for arrearages that
accumulated during the time the family was on welfare. In child 
support cases in which there is no current assignment of support 
rights to the State, review is required at least once every 36 months 
only if a parent requests it. If the review indicates that adjustment 
of the support amount is appropriate, the State must proceed to adjust 
the award accordingly.

The Family Support Act also required States to notify parents in cases 
being enforced by the State of their right to request a review, of 
their right to be informed of the forthcoming review at least 30 days 
before the review begins, and of any proposed adjustment or 
determination that there should be no change in the award amount. In 
the latter case, the parent must be given at least 30 days after 
notification to initiate proceedings to challenge the proposed 
adjustment or determination.

The 1996 welfare reform law somewhat revised the review and 
modification requirements. The mandatory 3-year review of child 
support orders was slightly modified to permit States some flexibility
in determining which reviews of welfare cases should be pursued and in 
choosing methods of review. States must review orders every 3 years 
(or more often at State option) if either parent or the State requests 
a review in welfare cases or if either parent requests a review in 
nonwelfare cases. States must notify parents of their review and 
adjustment rights at least once every 3 years. States can use one of 
three different methods for adjusting orders:  (1) the child support 
guidelines (i.e., current law); (2) an inflation adjustment in 
accordance with a formula developed by the State; or (3) an automated 
method to identify orders eligible for review followed by an 
appropriate adjustment to the order, not to exceed any threshold 
amount determined by the State. If either an inflation adjustment or 
an automated method is used, the State must allow either parent to 
contest the adjustment.

Especially during the early 1980s, a major issue in the modification 
of awards was the practice of retroactive modifications. The vast 
majority of such retroactive modifications had the effect of reducing 
the amount of child support ordered. Thus, for example, an order for 
$200 a month for child support, which was unpaid for 36 months, should 
accumulate an arrearage of $7,200. Yet, if the obligor was brought 
to court, having made no prior attempt to modify the order, the order 
might be reduced to $100 a month retroactive to 36 months prior to the 
date of modification. This retroactive modification would reduce the
arrearage from $7,200 to $3,600. Cases such as this, which had serious 
impacts on custodial parents and their children, convinced Congress 
to take action.

Thus, in 1986 Congress enacted section 9103 of Public Law 99-509  
(section 466(a)(9) of the Social Security Act) to change State 
practices involving modification of child support arrears. The 
provision required States to change their laws so that any payment 
of child support, on and after the date due, is a "judgment" (the 
Official decision or finding of a court on the respective rights and 
claims of the parties to an action) by operation of law. The 
provision also required that the judgment be entitled to full faith 
and credit in the originating State and in any other State. Full 
faith and credit is a constitutional principle that the various 
States must recognize the judgments of other States within the 
United States and accord them the force and effect they would have 
in their home State.

The 1986 provision also greatly restricted retroactive modification
to make  it more difficult for courts and administrative entities to 
forgive or reduce arrearages. More specifically, orders can be 
retroactively modified only for a period during which there is 
pending a petition for modification and only from the date that 
notice of the petition has been given to the custodial or 
Anoncustodial parent.


ESTABLISHING AND ENFORCING MEDICAL SUPPORT

Medical support is the legal provision of payment of medical, dental, 
prescription, and other health care expenses. The requirement for 
medical child support is a part of all child support orders 
(administered by CSE agencies), and it only pertains to the parent's 
dependent children.  It can include provisions to cover health 
insurance costs as well as cash payments for unreimbursed medical 
expenses. Medical support can take several forms.  The noncustodial 
parent may be ordered to: (1) provide health insurance if available 
through the noncustodial parent's employer; (2) pay for private health 
insurance (health care coverage) premiums or reimbursement to the 
custodial parent for all or a portion of the costs of health 
insurance obtained by the custodial parent; or (3) pay additional 
amounts to cover a portion of ongoing medical bills as reimbursement 
for uninsured medical costs.

The first connection between medical support and child support came as 
an attempt to recoup the costs of Medicaid provided to public 
assistance families under Title XIX of the Social Security Act. Two 
years after creation of the IV-D program, the Medicare/Medicaid 
Antifraud and Abuse Amendments of 1977 established a medical support
enforcement program that allowed States to require that Medicaid 
applicants assign their rights to medical support. Further, in an 
effort to cover children by private insurance instead of public 
programs, when available, it permitted IV-D and Medicaid agencies to
enter into cooperative agreements to pursue medical child support 
assigned to the State. Also, State IV-D agencies were required to 
notify Medicaid agencies when private family health coverage was 
either obtained or discontinued for a Medicaid-eligible person.

Section 16 of Public Law 98-378, enacted in 1984, required the 
Secretary of HHS to issue regulations to require that State child 
support agencies petition for the inclusion of medical support as part 
of any child support order whenever health care coverage is available 
to the noncustodial parent at reasonable cost. According to Federal 
regulations, any employment-related or other group coverage is 
considered reasonable, under the assumption that health insurance is 
inexpensive to the employee/noncustodial parent. A 1993 study by 
Cooper and Johnson that analyzed 1987 data from the Center for Health 
Expenditures and Insurance Studies indicated that for workers with 
income below the poverty line and employer-provided family health 
insurance coverage, 77 percent of the premium was paid for by the 
employer.

On October 16, 1985, the OCSE published regulations amending previous 
regulations and implementing section 16 of Public Law 98-378. The 
regulations required State child support agencies to obtain basic 
medical support information and provide this information to the State 
Medicaid agency. The purpose of medical support enforcement is to 
expand the number of children for whom private health insurance coverage 
is obtained by increasing the availability of third party resources to 
pay for medical care and thereby reduce Medicaid costs for both the 
States and the Federal Government. If the custodial parent does not 
have satisfactory health insurance coverage, the child support agency
must petition the court or administrative authority to include medical 
support in new or modified support orders and inform the State Medicaid 
agency of any new or modified support orders that include a medical 
support obligation. The regulations also required child support 
agencies to enforce medical support that has been ordered by a court
or administrative process. States receive child support matching funds
at  the 66-percent rate for required medical support activities. 
Before these regulations were issued, medical support activities were 
pursued by child support agencies only under optional cooperative 
agreements with Medicaid agencies.

Some of the functions that the child support agency may perform under 
a cooperative agreement with the Medicaid agency include: receiving 
referrals from the Medicaid agency, locating noncustodial parents, 
establishing paternity, determining whether the noncustodial parent 
has a health insurance policy or plan that covers the child, obtaining 
sufficient information about the health insurance policy or plan to 
permit the filing of a claim with the insurer, filing a claim with the 
insurer or transmitting the necessary information to the Medicaid 
agency, securing health insurance coverage through court or 
administrative order, and recovering amounts necessary to reimburse 
medical assistance payments.

On September 16, 1988, OCSE issued regulations expanding the medical 
support enforcement provisions. These regulations required the child 
support agency to develop criteria to identify existing child support 
cases that have a high potential for obtaining medical support, and to 
petition the court or administrative authority to modify support 
orders to include medical support for these cases even if no other 
modification is anticipated. The child support agency also is required 
to provide the custodial parent with information regarding the health 
insurance coverage obtained by the noncustodial parent for the child. 
Moreover, the regulation deleted the condition that child support 
agencies may secure health insurance coverage under a cooperative 
agreement only when it will not reduce the noncustodial parent's 
ability to pay child support.

Before late 1993, employees covered under their employer's health care 
plans generally could provide coverage to children only if the 
children lived with the employee. However, as a result of divorce 
proceedings, employees often lost custody of their children but were 
nonetheless required to provide their health care coverage. While the 
employee would be obliged to follow the court's directive, the employer 
that sponsored the employee's health care plan was under no similar 
obligation. Even if the court ordered the employer to continue health 
care coverage for the nonresident child of their employee, the employer
would be under no legal obligation to do so (Shulman, 1994, pp. 1-2). 
Aware of this situation, Congress took the following legislative 
action in the Omnibus Budget Reconciliation Act of 1993:

1.  Insurers were prohibited from denying enrollment of a child under 
the health insurance coverage of the child's parent on the grounds 
that the child was born out of wedlock, is not claimed as a dependent
on the parent's Federal income tax return, or does not reside with 
the parent or in the insurer's service area;
2.  Insurers and employers were required, in any case in which a 
parent is required by court order to provide health coverage for a 
child and the child is otherwise eligible for family health coverage 
through the insurer: (a) to permit the parent, without regard to any 
enrollment season restrictions, to enroll the child under such family 
coverage; (b) if the parent fails to provide health insurance coverage 
for a child, to enroll the child upon application by the child's other 
parent or the State child support or Medicaid agency; and (c) with 
respect to employers, not to disenroll the child unless there is 
satisfactory written evidence that the order is no longer in effect 
or the child is or will be enrolled in comparable health coverage 
through another insurer that will take effect not later than the 
effective date of the disenrollment;
3.  Employers doing business in the State, if they offer health 
insurance and  if a court order is in effect, were required to 
withhold from the employee's compensation the employee's share of
premiums for health insurance and to pay that share to the insurer.
The Secretary of HHS may provide by regulation for such exceptions 
to this requirement (and other requirements described above that 
apply to employers) as the Secretary determines necessary to ensure 
compliance with an order, or with the limits on withholding that are 
specified in section 303(b) of the Consumer Credit Protection Act;
4.  Insurers were prohibited from imposing requirements on a State 
agency acting as an agent or assignee of an individual eligible 
for medical assistance that are different from requirements 
applicable to an agent or assignee of any other individual;
5.  Insurers were required, in the case of a child who has coverage 
through the insurer of a noncustodial parent to: (a) provide the
custodial parent with the information necessary for the child to 
obtain benefits; (b) permit the custodial parent (or provider, with 
the custodial parent's approval) to submit claims for covered services
without the approval of the noncustodial parent; and (c) make payment
on claims directly to the custodial parent, the provider, or the 
State agency; and 
6.  The State Medicaid agency was permitted to garnish the wages, 
salary, or other employment income of, and to withhold State tax 
refunds to, any person who: (a) is required by court or administrative
order to provide health insurance coverage to an individual eligible 
for Medicaid; (b) has received payment from a third party for the 
costs of medical services to that individual; and (c) has not 
reimbursed either the individual or the provider. The amount subject 
to garnishment or withholding is the  amount required to reimburse 
the State agency for expenditures for costs of medical services
provided under the Medicaid Program. Claims for current or past due
child support take priority over any claims for the costs of medical 
services.
         These provisions do not appear to be having much of an impact 
on the number of children in single-parent families with medical 
coverage. According to OCSE data, in 2001, only 49 percent of child 
support orders included health insurance coverage and the health 
insurance order was complied with in only 18 percent of the cases. 
These figures indicate that many children still lack coverage. One way 
to increase medical support may be to require withholding of health 
insurance premiums in all cases with medical support orders (Gordon, 
1994). 

Under the 1996 welfare reform legislation, the definition of "medical 
child support order" in the Employee Retirement Income Security Act 
(ERISA) was expanded to clarify that any judgment, decree, or order 
that is issued by a court or by an administrative process has the 
force and effect of law. In addition, the new law stipulates that all 
orders enforced by the State CSE agency must include a provision for 
health care coverage. If the noncustodial parent changes jobs and the 
new employer provides health coverage, the State must send notice of
coverage to the new employer; the notice must serve to enroll the 
child in the health plan of the new employer.

Public Law 105-200, enacted in 1998, provided for a uniform manner for 
States to inform employers about their need to enroll the children of 
noncustodial parents in employer-sponsored health plans. It required 
the CSE agency to use a standardized national medical support notice 
(developed by HHS and the Department of Labor) to communicate to 
employers the issuance of a medical support order. Employers are 
required to accept the form as a "qualified medical support order" 
under ERISA.  States were required to begin using the national medical 
support notice in October 2001, although many States had to delay 
implementation until enactment of required State enabling legislation. 
(In April 2003 only about half of the States were using the national 
medical support notice.)  An appropriately completed national medical 
support notice is considered to be a "Qualified Medical Child Support
Order" and as such must be honored by the employers group health plan. 

COLLECTING CHILD SUPPORT

Local courts and child support enforcement agencies attempt to collect 
child support when the noncustodial parent does not pay. The most 
important collection method is wage withholding. Other techniques for
enforcing payments include regular billings; delinquency notices; 
liens on property; offset of unemployment compensation payments; 
seizure and sale of property; reporting arrearages to credit agencies; 
garnishment of wages; seizure of State and Federal income tax refunds; 
revocation of various types of licenses (drivers', business, 
occupational, recreational) to persons who are delinquent in their
child support payments; attachment of lottery winnings and insurance
settlements of debtor parents; and Federal imprisonment, fines or both.

In addition to approaches authorized by the Federal Government through 
the child support program, States use a variety of other collection 
techniques. In fact, States have been at the forefront in implementing 
innovative approaches. Some States hire private collection agencies to 
collect child support payments. Some States bring charges of criminal 
nonsupport or civil or criminal contempt of court against noncustodial
parents who fail to pay child support. These court proceedings are 
usually lengthy because of court backlogs, delays, and continuances. 
Once a court decides the case, noncustodial parents are often given 
probationor suspended sentences, and occasionally they are even 
awarded lower support payments and partial payment of arrearages.
To combat problems associated with court delays, the child support 
statute requires States to implement expedited processes under the
State judicial system or State administrative processes for obtaining 
and enforcing support orders.

Given the pivotal role of collections in the child support process, 
this section now turns to detailed discussion of the most effective 
collections procedures. Summary data on the effectiveness of four top
collection methods are presented in Table 8-3.

Wage withholding
The Family Support Act of 1988 greatly expanded wage withholding by 
requiring immediate withholding to begin in November 1990 for all new 
or modified orders being enforced by States. Equally important, States 
were required, with some exceptions, to implement immediate wage 
withholding in all support orders initially issued on or after
January 1, 1994, regardless of whether a parent has applied for child 
support services. 

The child support amendments of 1984 also required that States have in  
effect two distinct procedures for withholding wages of noncustodial 
parents. First, for existing cases enforced through the child support
agency, States were required to impose wage withholding whenever an 
arrearage accrued that was equal to the amount of support payable for
1 month. Second, for all child support cases, all new or modified 
orders were required to include a provision for wage withholding when 
an arrearage occurs. The intent of the second procedure was to ensure 
that orders not enforced through the child support agency contain the 
authority necessary to permit wage withholding to be initiated by
someone other than the child support agency if and when an arrearage
occurs.


TABLE 8-3--CHILD SUPPORT COLLECTIONS MADE BY VARIOUS ENFORCEMENT 
TECHNIQUES, SELECTED FISCAL YEARS 1989-2002


[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]


According to the Federal statute, State due process requirements govern 
the scope of notice that must be provided to an obligor (i.e.
noncustodial parent) when withholding is triggered. As a general rule, 
the noncustodial parent is entitled to advance notice of the 
withholding procedure. This notice, where required, must inform the 
noncustodial parent of the following: the amount that will be withheld; 
the application of withholding to any current or subsequent period of 
employment; the procedures available for contesting the withholding 
and the sole basis for objection (i.e., mistake of fact); the period 
allotted to contest the withholding and the result of failure to 
contact the State within this timeframe (i.e., issuance of notification 
to the employer to begin withholding); and the steps the State will 
take if the noncustodial parent contests the withholding, including the
procedure to resolve such contests.

If the noncustodial parent contests the withholding notice, the State 
must conduct a hearing, determine if the withholding is valid, notify 
the noncustodial parent of the decision, and notify the employer to 
commence the deductions if withholding is upheld. All of this must 
occur within 45 days of the initial notice of withholding. Whether a 
State uses a judicial or an administrative process, the only basis for 
a hearing is a factual mistake about the amount owed (current, 
arrearage or both) or the identity of the noncustodial parent.

When withholding is uncontested or when a contested case is resolved in 
favor of withholding, the administering agency must serve a withholding 
notice on the employer. The employer is required to withhold as much of 
the noncustodial parent's wages as is necessary to comply with the 
order, including the current support amount plus an amount to be 
applied toward liquidation of any arrearage. In addition, the employer 
may retain a fee to offset the administrative cost of implementing 
withholding. Employer fees per wage withholding transaction range 
from nothing to $2 per month to $2 per pay period to $5 per remittance 
to $10 per month to 2 percent of the remittance (Automatic Data 
Processing, Inc., 2001). 

The Federal Consumer Credit Protection Act limits garnishment to 
50 percent of disposable earnings for a noncustodial parent who is 
the head of a household, and 60 percent for a noncustodial parent who 
is not supporting a second family. These percentages increase by 
5 percentage points, to 55 and 65 percent respectively, when the 
arrearages represent support that was due more than 12 weeks before 
the current pay period.

Upon receiving a withholding notice, the employer must begin 
withholding the appropriate amount of the obligor's wages no later 
than the first pay period that occurs after 14 days following the date
the notice was mailed. The 1984 amendments regulate the language in 
State statutes on the other rights and liabilities of the employer. 
For instance, the employer is subject to a fine for discharging a 
noncustodial parent or taking other forms of retaliation as a result
of a withholding order. In addition, the employer is held liable for 
amounts not withheld as directed.

In addition to being able to charge the noncustodial parent a fee 
for the administrative costs associated with wage withholding, the 
employer can combine all support payments required to be withheld for 
multiple obligors into a single payment and forward it to the child 
support agency or court with a list of the cases to which the payments 
apply. The employer need not vary from the normal pay and disbursement 
cycle to comply with withholding orders; however, support payments 
must be forwarded to the State or other designated agency within 
10 days of the date on which the noncustodial parent is paid.

When the noncustodial parent changes jobs, the previous employer must 
notify the court or agency that entered the withholding order. The 
State must then notify the new employer or income source to begin 
withholding from the obligor's wages. In addition, States must develop 
procedures to terminate income withholding orders when all of the
children are emancipated and no arrearage exists.

Federal law provides three exceptions to the income withholding rule: 
(1) if one of the parents demonstrates, and the court (or 
administrative process) finds, that there is good cause not to require 
immediate income withholding, (2) if both parents agree in writing to 
an alternative payment arrangement, or (3) at the HHS Secretary's 
discretion, if a State can demonstrate that the rule will not increase 
the effectiveness or efficiency of the State's CSE Program. For income 
withholding purposes, ``income'' means any periodic form of payment 
due an individual, regardless of source, including wages, salaries,
commissions, bonuses, workers' compensation, disability, payments from 
a pension or retirement program, and interest.
	As shown in Table 8-3, the congressional emphasis on wage 
withholding has paid off handsomely. The total amount of support
collected through wage withholding has increased each year, reaching 
$15.5 billion in 2002 (however, about $3.7 billion was from non-CSE 
collections from wage withholding); the percentage of total collections
achieved through wage withholding has also increased, reaching 
65 percent in 2002.

Federal income tax refund offset
Under this program, the Internal Revenue Service (IRS), operating on 
request from a State filed through the Secretary of HHS, simply 
intercepts tax returns and deducts the amount of certified child 
support arrearages. The money is then sent to the State for 
distribution. Since the enactment of the Omnibus Budget Reconciliation
Act of 1981 (Public Law 97-35), IRS has been able to withhold past 
due support from Federal tax refunds upon a simple showing by the 
State that an individual owes at least $150 in past due support which 
has been assigned to the State as a condition of Aid to Families with
Dependent Children (AFDC), now TANF, eligibility. The withheld amount
is sent to the State agency, together with notice of the taxpayer's 
current address.

The 1984 amendments (P.L. 98-378) created a similar IRS Offset Program 
for non-AFDC families owed child support. States must submit to the 
IRS for withholding the names of absent parents who have arrearages of
at least $500 and who, on the basis of current payment patterns and 
the enforcement efforts that have been made, are unlikely to pay the 
arrearage before the IRS offset can occur. The law established 
specific notice requirements and mandated that the noncustodial parent
and his spouse (if any) be informed of the impending use of the tax 
offset procedure. The purpose of this notice is to protect the 
unobligated spouse's portion of the tax refund. The 1988 provision 
applied to refunds payable after December 31, 1985, and before 
January 1, 1991. Public Law 101-508, enacted in 1990, made permanent 
the IRS Offset Program for non-AFDC families. In tax year 2002, 
according to HHS, more than 1.4 million cases were offset. The total 
amount intercepted was about $1.5 billion, up by a factor of well over  
four since 1986 ($308 million).  

State income tax refund offset
	The child support amendments of 1984 mandated that States 
increase the effectiveness of the child support program by, among other 
things, enacting several collection procedures. Among the required 
procedures is the interception of State income tax refunds payable to 
noncustodial parents up to the amount of overdue support. As in the 
case of liens and bonds, this procedure need not be used in cases 
found inappropriate under State guidelines.

In order for the State tax refund offset to work effectively, 
cooperation between the State's department of revenue and the child 
support agency is crucial. The names and Social Security numbers (SSNs)
of delinquent noncustodial parents are submitted to the department of 
revenue for matching with tax return forms. If a match occurs and a 
refund is due, the refund or a portion of it is transferred from 
the State department of revenue to the child support agency and then 
credited to the appropriate noncustodial parent to offset his support 
debt. The child support  agency must give advance notice of the 
impending offset to the noncustodial parent and also must inform him
of the process for contesting and resolving the proposed action. If the 
custodial parent does not respond to the notice, the money is 
intercepted and forwarded to the child support agency for distribution.
In fiscal year 2002, the State Tax Intercept Program collected 
$210 million (Table 8-3). Unlike the Federal program, which requires 
that States certify a specified amount before the offset can be applied 
($150 for TANF families and $500 for non-TANF families), States choose 
their own level for certification. In many States, the amount is the
same for both TANF and non-TANF families. Although the amounts vary 
greatly from State to State, the certification amount in the typical 
State is about $100.


Unemployment compensation intercept
Public Law 97-35, the Omnibus Budget Reconciliation Act of 1981, 
required State child support agencies to determine on a periodic basis 
whether individuals receiving unemployment compensation owe support
obligations that are not being met. The act also required child support 
agencies to enforce support obligations in accord with State-developed 
guidelines for obtaining an agreement with the individual to have a 
specified amount of support withheld from unemployment compensation or, 
in the absence of an agreement, for bringing legal proceedings to 
require the withholding. The child support agency must reimburse the 
State employment security agency for the administrative costs 
attributable to withholding unemployment compensation. The unemployment
compensation intercept collected $577 million in fiscal year 2002 
(Table 8-3). A number of States, especially those with high levels of 
unemployment, are finding that the unemployment offset procedure can
raise collections significantly.  

Property liens
A lien is a legal claim on someone's property as security against a 
just debt. The use of liens for child support enforcement was 
characterized during congressional debate on the child support 
amendments of 1984 as "simple to execute and cost effective and a
catalyst for an absent parent to pay past due support in order to
clear title to the property in question" (U.S. House, 1983). The 
House report also stated that liens would complement the income 
withholding provisions of the 1984 law and be particularly helpful 
in enforcing support payments owed by noncustodial parents with 
substantial assets or income but who are not salaried employees.

The 1984 legislation required States to enact laws and implement  
"procedures under which liens are imposed against real property for 
amount of overdue support owed by an absent parent who resides or 
owns property in the State."  Liens can apply to property such as 
land, vehicles, houses, antique furniture, and livestock. The law 
provides, however, that States need not use liens in cases in which,
on the basis of guidelines that generally are available to the public, 
they determine that lien procedures would be inappropriate. This 
provision implicitly requires States to develop guidelines about use 
of liens.

Generally, a lien for delinquent child support is a statutorily 
created mechanism by which an obligee obtains a nonpossessory interest 
in property belonging to the noncustodial parent. The interest of the
custodial parent is a slumbering interest that allows the noncustodial
parent to retain possession of the property, but affects the 
noncustodial parent's ability to sell the property or transfer 
ownership to anyone else. A child support lien converts the custodial 
parent from an unsecured to a secured creditor. As such, it gives the 
custodial parent priority over unsecured creditors and subsequent 
secured creditors. In some States a lien is established automatically 
upon entry of a support order and the first incidence of noncompliance 
by the obligor. Frequently, the mere imposition of a lien will motivate 
the delinquent parent to pay past-due support to remove the lien. When 
this is not the case, it may become necessary to enforce the lien. 
Liens are not self-executory. If a lien exists, a debtor must satisfy 
the judgment before the property may be sold or transferred. However, 
it is not necessary for the obligee to wait until the obligor tries 
to transfer the property before taking action. The obligee may 
enforce her judgment by execution and levy against the property if she 
believes the amount of equity in the property justifies execution.

A procedure developed by the IRS, known as Project 1099 (that is, the 
number of the IRS form used), has helped several States increase their 
use of liens by identifying individuals who possess appropriate 
assets. Initiated in 1984 to assist in location efforts, since the 
fall of 1988 Project 1099 has routinely provided wage and employer 
information as well as location and asset information on noncustodial
parents. As noted earlier, Project 1099 operations were suspended in 
2002; OSCE contends that the use of the National Directory of New 
Hires and the Financial Institution Data Match program are a more 
effective use of CSE resources.

The welfare reform legislation passed in 1996 (Public Law 104-193)  
required States to have procedures under which liens arise by 
operation of law against property for the amount of the past-due 
support. States must grant full faith and credit to liens of other 
States if the originating State agency or party has complied with 
procedural rules relating to the recording or serving of lien.

Bonds, securities, and other guarantees
	The 1984 child support amendments required States to have in 
effect and use procedures under which noncustodial parents must post 
security, bond, or some other guarantee to secure payment of overdue 
child support. This technique is useful where significant assets exist 
although the noncustodial parent's income is sporadic, seasonal, or 
derived from self-employment. As in the case of liens, this procedure 
need not be used in cases found inappropriate under State guidelines. 
The State guidelines should define and target assets that can 
appropriately be sought to secure or guarantee payment without 
hindering the noncustodial parent from effectively pursuing his 
livelihood.

IRS full collection process
Since 1975, Congress has authorized the IRS to collect certain child 
support arrearages as if they were delinquent Federal taxes. This 
method is known as the IRS full collection process. It works as 
follows: The Secretary of HHS must, upon the request of a State, 
certify to the Secretary of Treasury any amounts identified by 
the State as delinquent child support. The Secretary of HHS may certify
only the amounts delinquent under a court or administrative order, and 
only upon a showing by the State that it has made diligent and 
reasonable efforts to collect amounts due using its own collection 
mechanisms. States must reimburse the Federal Government for any costs 
involved in making the collections. This full collection process is 
used only when there is a good chance that the IRS can make a 
collection and only for cases in which a child support obligation 
is delinquent and the amount owed has been certified to be at least 
$750. Use by the States of this regular IRS collection mechanism, 
which may include seizure of property, freezing of  accounts, and 
use of other aggressive procedures, has been relatively infrequent. 
In fiscal year 1998, collections were made in 477 cases nationwide, 
for a total collection of $230,417. In fiscal year 2000, collections 
were made in 240 cases nationwide, for a total collection of $192,935.

Withholding of passports and various types of licenses
The 1996 welfare reform law required States to implement procedures 
under which the State would have authority to withhold, suspend, or 
restrict use of driver's licenses, professional and occupational
licenses, and recreational and sporting licenses of persons who owe 
past-due support or who fail to comply with subpoenas or warrants 
relating to paternity or child support proceedings. The law also 
authorized the Secretary of State to deny, revoke, or restrict 
passports of debtor parents whose child support arrearages exceed 
$5,000. According to HHS, in fiscal year 2000, the passport denial 
program collected more than $6.5 million in lump sum child support
payments and currently is denying about 60 passports daily to 
delinquent noncustodial parents.

Credit bureau reporting
The 1984 Federal child support legislation required States to develop 
procedures for providing child support debt information to credit 
reporting agencies (sometimes referred to as credit bureaus). The 
primary purposes for reporting delinquent child support payers to 
credit reporting agencies are to discourage noncustodial parents 
from not making their child support payments, to prevent the 
undeserved extension of credit, and to maintain the noncustodial 
parent's ability to pay his child support obligation. Other benefits
include access by child support agencies to address, employment, and 
asset information.

The 1984 amendments required States to report overdue child support 
obligations exceeding $1,000 to consumer reporting agencies if such 
information is requested by the credit bureau. States have the option 
of reporting in cases in which the noncustodial parent is less than 
$1,000 in arrears. States must provide noncustodial parents with 
advance notice of intent to release information on their child support 
arrearage and an opportunity for them to contest the accuracy of the 
information. The child support agency may charge the credit bureau a 
fee for the information.


Public Law 102-537, the Ted Weiss Child Support Enforcement Act of 
1992, amended the Fair Credit Reporting Act to require consumer credit
reporting agencies to include in any consumer report information on 
child support delinquencies. The information is provided by or
verified by State or local child support agencies. Public Law 103-432, 
enacted in October 1994, included a provision that requires States to 
periodically report to consumer reporting agencies the name of parents
owing at least 2 months of overdue child support, and the amount of 
the child support overdue.

In order to facilitate the access of child support officials to credit 
information, the 1996 welfare reform legislation stated that, in 
response to a request by the head of a State or local CSE agency or 
other authorized official, consumer credit agencies must release 
information if the person making the request makes all of the 
following certifications: that the consumer report is needed to 
establish an individual's capacity to make child support payments or 
determine the level of payments; that paternity has been established 
or acknowledged; that the consumer has been given at least 10 days 
notice by certified or registered mail that the report is being 
requested; and that the consumer report will be kept confidential, 
will be used solely for child support purposes, and will not be used 
in connection with any other civil, administrative, or criminal
proceeding or for any other purpose. Consumer reporting agencies 
also must give reports to a CSE agency for use in setting an initial
or modified award. These provisions amended the Fair Credit Reporting 
Act.

The 1996 law also required States to periodically report to consumer 
reporting agencies the name of any noncustodial parent who is 
delinquent in the payment of support and the amount of past-due 
support owed by the parent. Before such a report can be sent, the
obligor must have been afforded all due process rights, including
notice and reasonable opportunity to contest the claim of child 
support delinquency.

Enforcement against Federal employees
The 1975 child support legislation included a provision allowing  
garnishment of wages and other payments by the Federal Government for 
enforcement of child support and alimony obligations. The law also 
provided that moneys payable by the United States to any individual 
for employment are subject to legal proceedings brought for the
enforcement of child support or alimony. The law sets forth in detail 
the procedures that must be followed for service of legal process 
and specifies that the term "based upon remuneration for employment" 
includes wages, periodic benefits for the payment of pensions, 
retirement pay including Social Security, and other kinds of 
Federal payments.

The 1996 welfare reform law substantially revised child support 
enforcement for Federal employees, including retirees and military 
personnel. As under prior law, Federal employees are subject to income 
withholding and other actions taken against them by State CSE agencies.
However, every Federal agency is responsible for responding to a State 
CSE Program as if the Federal agency were a private business. The head 
of each Federal agency must designate an agent, whose name and address 
must be published annually in the Federal Register, to be responsible 
for handling child support cases. The agency must respond to 
withholding notices and other matters brought to its attention by CSE
officials. Child support claims are given priority in the allocation 
of Federal employee income. 

Enforcement against military personnel
Child support enforcement workers face unique difficulties when 
working on cases in which the absent parent is an active duty member 
of the military service. Learning to work through military channels
can prove both challenging and frustrating, especially if the child 
support agency is not near a military base. As a result, military
cases are often ignored or not given sufficient attention (Office of 
Child Support, 1991).

Public Law 97-248, the Tax Equity and Fiscal Responsibility Act of 
1982, required allotments from the pay and allowances of any active
duty member of the uniformed service who fails to make child or
spousal support payments. This requirement arises when the service
member fails to make support payments in an amount at least equal to
the value of 2 months' worth of support. Provisions of the Federal 
Consumer Credit Protection Act apply, limiting the percentage of the 
member's pay that is subject to allotment. The amount of the allotment 
is the  amount of the support payment, as established under a legally 
enforceable administrative or judicial order.

Since October 1, 1995, the Department of Defense has consolidated 
its garnishment operations at the Defense Finance and Accounting 
Service in Cleveland, Ohio. Support orders received by the Service
are processed immediately and notices are sent to the appropriate 
military pay center to start payments in the first pay cycle (Office 
of Child Support, 1995c).

As a result of the 1996 welfare reform law, the Secretary of Defense 
must establish a central personnel locator service, which must be 
updated on a regular basis, that permits location of every member
of the Armed Services. The Secretary of each branch of the military 
service must grant leave to facilitate attendance at child support 
hearings and other child support proceedings. The Secretary of each 
branch also must withhold support from retirement pay and forward it 
to State disbursement units.

Small business loans
The Small Business Administration Reauthorization and Amendments Act
of 1994 (Public Law 103-403), which included the requirement that
recipients of financial assistance from the Small Business 
Administration, including direct loans and loan guarantees, must 
certify that the recipient is not more than 60 days delinquent in 
the payment of child support.


Other provisions
A February 27, 1995 Executive order established the executive branch 
of the Federal Government, including its civilian employees and the
uniformed services members, as a model employer in promoting and 
facilitating the establishment and enforcement of child support. 
The Executive order states that the Federal Government is the 
Nation's largest single employer and as such should set an example 
of leadership and encouragement in ensuring that all children are 
properly supported. Among other measures, the order requires Federal 
agencies and the uniformed services to cooperate fully in efforts to 
establish paternity and child support orders and to enforce the 
collection of child and medical support. The order also requires 
Federal agencies to provide information to their personnel concerning
the services that are available to them and to ensure that their 
children are provided the support to which they are legally entitled 
(Office of Child Support, 1995a).

The 1996 welfare reform law required States to implement expedited 
procedures to secure assets to satisfy arrearages by intercepting or
seizing periodic or lump sum payments (such as unemployment and 
workers compensation), lottery winnings, awards, judgments, or 
settlements. States also must have expedited procedures to seize 
assets of the debtor parent held by public or private retirement 
funds and financial institutions.

INTERSTATE ENFORCEMENT 

The most difficult child support orders to enforce are interstate 
cases. States are required to cooperate in interstate child support 
enforcement, but problems arise from the autonomy of local courts. 
Family law traditionally has been under the jurisdiction of State 
and local governments, and citizens fall under the jurisdiction 
of the courts where they live.

During the 1930s and 1940s, such laws were used to establish and 
enforce support obligations when the noncustodial parent, custodial 
parent, and child lived in the same State. But when noncustodial 
parents lived out of State, enforcing child support was cumbersome 
and ineffective. Often the only option in these cases was to extradite
the noncustodial parent and, when successful, to jail the person for 
nonsupport. This procedure, rarely used, generally punished the 
irresponsible parent, but left the abandoned family without financial
support.

A University of Michigan study (Hill, 1988) of separated parents 
found that 12 percent lived in different States 1 year after divorce 
or separation. That proportion increased to 25 percent after 3 years, 
and to 40 percent after 8 years. Estimates based on the Federal 
income tax refund offset and other sources suggest that approximately 
30 percent of all child support cases involve interstate residency 
of the custodial and noncustodial parents (Weaver & Williams, 1989, 
p. 510). According to the U.S. Census Bureau (1999) data, 13 percent 
of noncustodial parents lived in a different State than their 
children, 3 percent lived overseas, and the residence of 10 percent 
of the noncustodial parents was unknown.  According to an OCSE 
Information Memorandum dated January 22, 2003, the interstate
caseload is about 25 percent of the total CSE caseload.

Uniform Reciprocal Enforcement of Support Act (URESA)
Starting in 1950, interstate cooperation was promoted through the 
adoption by the States of URESA. This act, which first was proposed 
by the National Conference of Commissioners on Uniform State Laws in 
1950, has been enacted in all 50 States, the District of Columbia,
Guam, Puerto Rico, and the Virgin Islands. The act was amended in 
1952 and 1958 and revised in 1968. Thus, even though every State 
has passed some provisions of URESA, many provisions vary from 
State to State. URESA, in short, is uniform in name only.

The purpose of URESA was to provide a system for the interstate 
enforcement of support orders without requiring the person seeking
support to go (or have her legal representative go) to the State in
which the noncustodial parent resided. Where the URESA provisions 
between the two States are compatible, the law can be used to 
establish paternity, locate an absent parent, and establish, modify, 
or enforce a support order across State lines. However, some observers 
note that the use of URESA procedures often resulted in lower orders 
for both current support and arrearages. They also contend that few 
child support agencies attempted to use URESA procedures to establish
paternity or to obtain a modification in a support order.

Long arm statutes
Unlike URESA, interstate cases established or enforced by long arm 
statutes use the court system in the State of the custodial parent 
rather than that of the noncustodial parent. When a person commits 
certain acts in a State of which he is not a resident, that person 
may be subjecting himself to the jurisdiction of that State. The 
long arm of the law of the State where the event occurs may reach out 
to grab the out-of-State person so that issues relating to the event
may be resolved where it happened. Under the long arm procedure, the
State must authorize by statute that the acts allegedly committed by 
the defendant are those that subject the defendant to the State's 
jurisdiction. An example is a paternity statute stating that if 
conception takes place in the State and the child lives in the State, 
the State may exercise jurisdiction over the alleged father even if 
he lives in another State. Long arm statute language usually extends 
the State's jurisdiction over an out-of-State defendant to the 
maximum extent permitted by the U.S. Constitution under the 14th 
amendment's due process clause. Long arm statutes may be used to 
establish paternity, establish support awards, and enforce support 
orders.



Federal courts
The 1975 child support law mandated that the State plan for child
support require States to cooperate with other States in establishing 
paternity, locating absent parents, and securing compliance with 
court orders. Further, it authorized the use of Federal courts as a 
last resort to enforce an existing order in another State if that 
State were uncooperative.

Section 460 of the Social Security Act provides that the district 
courts of the United States shall have jurisdiction, without regard 
to any amount in controversy, to hear and determine any civil action 
certified by the Secretary of HHS under section 452(a)(8) of the act.
A civil action under section 460 may be brought in any judicial 
district in which the claim arose, the plaintiff resides, or the 
defendant resides.  Section 452(a)(8) states that the Secretary of 
HHS shall receive applications from States for permission to use the 
courts of the United States to enforce court orders for support 
against noncustodial parents. The Secretary must approve applications 
if he finds both that a given State has not enforced a court order of 
another State within a reasonable time and that using the Federal 
courts is the only reasonable method of enforcing the order.

As a condition of obtaining certification from the Secretary, the 
child support agency of the initiating State must give the child 
support agency of the responding State at least 60 days to enforce 
the order as well as a 30-day warning of its intent to seek enforcement
in Federal court. If the initiating State receives no response  within 
the 30-day limit, or if the response is unsatisfactory, the initiating
State may apply to the Office of Child Support Enforcement (OCSE) 
Regional Office for certification. The application must attest that 
all the requirements outlined above have been satisfied. Upon
certification of the case, a civil action may be filed in the U.S. 
district court. Although this interstate enforcement procedure has 
been available since enactment of the child support program in 1975,
there has been only one reported case of its use by a State (the 
initiating State was California; the responding State was Texas).

Interstate income withholding
Interstate income withholding is a process by which the State of 
the custodial parent seeks the help of the State in which the 
noncustodial parent's income is earned to enforce a support order
using the income withholding mechanism. Pursuant to the child 
support amendments of 1984, income withholding was authorized for all 
valid instate or out-of-State orders issued or modified after 
October 1, 1985, and for all orders being enforced by the IV-D 
program, regardless of the date the order was issued. Although 
Federal law requires a State to enforce another State's valid orders 
through interstate withholding, there is no Federal mandate that 
interstate income withholding procedures be uniform. Approaches vary 
from the Model Interstate Income Withholding Act to URESA registration. 
The preferred way to handle an interstate income withholding request is 
to use the interstate action transmittal form from one child support 
agency to another. In child support enforcement cases, Federal 
regulations required that by August 22, 1988, all interstate income 
withholding requests be sent to the enforcing State's central registry 
for referral to the appropriate State or local official. The actual 
wage withholding procedure used by the State in which the noncustodial
parent lives is the same as that used in intrastate cases. In a 1992 
report (U.S. General Accounting Office, 1992a, p. 4 & pp. 21-28), GAO 
indicated that the main reason for the  failure of interstate income 
withholding was the lack of uniformity in its implementation.

The 1996 welfare law required the HHS Secretary, in consultation with 
State CSE directors, to issue forms by October 1, 1996 that States 
must use for income withholding, for imposing liens, and for issuing 
administrative subpoenas in interstate cases. States were required to
begin using the forms by March 1, 1997.

Full faith and credit
One of the most significant barriers to improved interstate 
collections is that, because a child support order is not considered 
a final judgment, the full faith and credit clause of the U.S. 
Constitution does not preclude modification. Thus, the order is 
subject to modification upon a showing of changed circumstances by the 
issuing court or by another court with jurisdiction. Congress could 
prohibit inter- or intrastate modifications of child support orders, 
but many students of child support hold that a complete ban on 
modifications would be unrealistic and unfair. A more likely approach
would be one under which States were required to give full faith and
credit to each other's child support orders under most circumstances.

The Omnibus Budget Reconciliation Act of 1986, Public Law 99-509, 
took a step in this direction by requiring States to treat past due
support obligations as final judgments entitled to full faith and 
credit in every State. Thus, a person who has a support order in one 
State does not have to obtain a second order in another State to 
obtain the money due should the debtor parent move from the issuing 
court's jurisdiction. The second State can modify the order 
prospectively if it finds that circumstances exist to justify a 
change, but the second State may not retroactively modify a child 
support order.

Public Law 103-383, the Full Faith and Credit for Child Support Orders
Act of 1994, restricted a State court's ability to modify a child 
support order issued by another State unless the child and the 
custodial parent have moved to the State where the modification is 
sought or have agreed to the modification.

The full faith and credit rules of the 1996 welfare reform law 
clarified the definition of a child's home State, made several 
revisions to ensure that the rules can be applied consistently with 
the Uniform Interstate Family Support Act (UIFSA), and clarified the 
rules regarding which child support order States must honor when 
there is more than one order.

Federal criminal penalties
The Child Support Recovery Act of 1992 imposed a Federal criminal 
penalty for the willful failure to pay a past due child support
obligation to a child who resides in another State and that has 
remained unpaid for longer than a year or is greater than $5,000. 
For the first conviction, the penalty is a fine of up to $5,000, 
imprisonment for not more than 6 months, or both; for a second 
conviction, the penalty is a fine of not more than $250,000, 
imprisonment for up to 2 years, or  both.

In response to concerns of law enforcement officials and prosecutors
that the 1992 law did not adequately address more serious instances
of nonpayment of child support obligations, Congress passed the 
Deadbeat Parents Punishment Act of 1998 (Public Law 105-187). The law
establishes two new categories of felony offenses, subject to a 2-year
maximum prison term. The offenses are: (1) traveling in interstate or
foreign commerce with the intent to evade a support obligation if the 
obligation has remained unpaid for more than 1 year or is greater than 
$5,000; and (2) willfully failing to pay a child support obligation
regarding a child residing in another State if the obligation has 
remained unpaid for more than 2 years or is greater than $10,000. 
According to the U.S. Department of Health and Human Services (HHS), 
the Nation's criminal child support enforcement initiative, "Project 
Save Our Children," which began in 1998 has received and reviewed over  
4,600 potential criminal nonsupport cases referred by State and county
CSE agencies resulting in 273 federal arrests, 173 criminal 
convictions, and the payment of nearly $8 million in past-due child 
support payments (2002 data). In addition, 315 arrests have been
made at the State level, resulting in 277 criminal convictions or 
civil adjudications and $10.7 million in court-ordered restitution.  
The Project Save Our Children initiative is conducted by officials 
from the HHS Office of Inspector General, the OCSE, the Department of
Justice, State CSE agencies, and local law enforcement organizations
working together to pursue chronic delinquent parents who owe large 
sums of child support.

Uniform Interstate Family Support Act (UIFSA)
UIFSA was drafted by the National Conference of Commissioners on 
Uniform State Laws and approved by the Commissioners in August 1992. It is 
designed to deal with desertion and nonsupport by instituting uniform laws in all 
50 States and the District of Columbia. The core of UIFSA is limiting control of a 
child support case to a single State, thereby ensuring that only one child support 
order from one court or child support agency is in effect at any given time. It 
follows that the controlling State will be able to effectively pursue interstate cases, 
primarily through the use of long arm statutes, because its jurisdiction is  
undisputed. Many, perhaps most, child support officials believe UIFSA will help 
eliminate jurisdictional disputes between States and lead to substantial increases in 
interstate collections.

UIFSA allows: (1) direct income withholding by the controlling State  
without second State involvement; (2) administrative enforcement 
without registration; and (3) registered enforcement based on the 
substantive laws of the controlling State and the procedural laws of 
the registering State. The order cannot be adjusted if only
enforcement is requested, and enforcement may begin upon registration
(before notice and hearing) if the receiving State's due process rules 
allow such enforcement. The controlling State may adjust the support
order under its own standards. In addition, UIFSA includes some uniform
evidentiary rules to make interstate case handling easier, such as 
using telephonic hearings, easing admissibility of evidence 
requirements, and admitting petitions into evidence without the need 
for live or corroborative testimony to make a prima facie case.

The 1996 welfare reform law required all States to enact UIFSA, 
including all amendments, before January 1, 1998. States are not 
required to use UIFSA in all cases if they determine that using other
interstate procedures would be more effective. All States and 
jurisdictions had adopted UIFSA by June 1998.

Other procedures that aid interstate enforcement
In 1948, the National Conference of Commissioners on Uniform State 
Laws and the American Bar Association approved the Uniform Enforcement 
of Foreign Judgments Act (UEFJA), which simplifies the collection of 
child support arrearages in interstate cases. Revised in 1964 and 
adopted in only 30 States, UEFJA provides that upon the filing of an
authenticated foreign (i.e., out-of-State) judgment and notice to the
obligor, the judgment is to be treated in the same manner as a local 
one. A judgment is the official decision or finding of a court on the 
respective rights of the involved parties. UEFJA applies only to final
judgments. As a general rule, child support arrearages that have been
reduced to judgment are considered final judgments and thus can be 
filed under UEFJA. An advantage of UEFJA is that it does not require
reciprocity (i.e., it need only be in effect in the initiating State).
A disadvantage is that UEFJA is limited to collection of arrearages; it 
cannot be used to establish an initial order or to enforce current 
orders. In fiscal year 2002, $1.203 billion was collected for 
interstate cases, up 163 percent from $457 million in fiscal year 1990.

Expedited procedures 
Regardless of whether a State uses judicial processes, administrative 
processes, or a combination, the 1996 welfare reform law required 
States to adopt a series of procedures to expedite both the 
establishment of paternity and the establishment, enforcement, and 
modification of child support. These procedures must give the State 
CSE agency the authority to take several enforcement actions, subject 
to due process safeguards, without the necessity of obtaining an order 
from any other judicial or administrative tribunal. For example, States 
must have expedited procedures to secure assets to satisfy an arrearage
by intercepting or seizing periodic or lump sum payments (such as 
unemployment and workers compensation), lottery winnings, awards, 
judgments, or settlements, and assets of the debtor parent held by 
public or private retirement funds and financial institutions.

Financial institution data match program
The 1996 law also required States to enter into agreements with 
financial institutions conducting business within their State for the
purpose of conducting a quarterly data match. The data match is 
intended to identify financial accounts (in banks, credit unions, 
money-market mutual funds, etc.) belonging to parents who are 
delinquent in the payment of their child support obligation. When a 
match is identified, State CSE programs may issue liens or levies 
(often referred to as  "freeze and seize" procedures) on the accounts 
of that delinquent obligor to collect the past-due child support. In 
1998 (P.L. 105-200), Congress made it easier for multi-State financial
institutions to match records by allowing the OCSE through the Federal
Parent Locator Service to assist States in conducting data matches 
with multi-State financial institutions. When matches are made, the 
information is sent to the States within 48 hours for placement of a 
lien on and seizure of all or part of the accounts identified. States 
are using their expedited procedures to seize the accounts and thereby
force debtor noncustodial parents to meet their child support 
obligations.

With the introduction of FIDM (Financial Institution Data Match), CSE 
agencies must conduct quarterly matches with hundreds of single-State 
financial institutions operating within their State. State agencies 
also must participate in matching at the Federal level with thousands 
of multi-State financial institutions  and process tens of thousands 
of matches resulting in collections through account seizures. State 
agencies also engage in interstate processing to identify and seize 
accounts located in another State. In addition, they engage in 
outreach to solicit the cooperation of financial institutions,
perform customer services to address the concerns of delinquent 
obligors whose access to financial assets has been  disrupted, and
develop automated systems to routinely process and manage large 
numbers of cases.

In fiscal year 2001, the Financial Institution Data Match program
found more than 1.4 million accounts belonging to more than 854,000
delinquent noncustodial parents nationwide with a value in excess of
$3.2 billion. 

Summary information on collection methods
Table 8-3 shows that 75 percent of the $23.8 billion in child support 
payments collected in fiscal year 2002 was obtained through four 
enforcement techniques: income withholding, Federal income tax refund 
offset, State income tax refund offset, and unemployment compensation 
intercept. The remaining  25 percent was collected from "other 
sources."  The "other sources" category includes collections from
parents who have informal agreements, collections from noncustodial
parents who voluntarily sent money for their children even though a 
support order never had been established (about 4 percent of all 
collections), and enforcement techniques such as liens against 
property, license and passport revocation, seizure of assets from 
financial institutions, posting of bonds or securities, and use of 
the full IRS collection procedure. By fiscal year 1991 income 
withholding had become the primary enforcement method, producing 
nearly 47 percent of all child support collections. By 2002, the 
percentage had increased even further, reaching 65 percent.  (Note: 
income withholding includes CSE and non-CSE collections. Approximately
$3.9 billion were non-CSE collections from income withholding.)

PRIVATE COLLECTION ACTIVITIES
	
	According to the OCSE, the Child Support Enforcement program 
handles about 60 percent of all child support cases. The rest are 
handled by private attorneys, private collection agencies, locally-
funded public child support enforcement agencies, or through mutual 
agreements between the parents.

Nonfederal CSE activities
	Some localities have chosen to operate a child support 
program using local funding sources and fees levied against 
noncustodial parents. A major complaint of these localities is that 
the enforcement tools (e.g., Federal and State tax refund intercepts, 
license sanctions, passport sanctions, data matches with financial 
institutions, reporting of delinquencies to credit bureaus) that now 
are available only to the Federal/State CSE program should be extended
to the entities working outside the Federal/ State system and to 
private contractors as well. However, State child support agencies, 
advocates representing both noncustodial and custodial parents, and 
privacy rights organizations have voiced concerns about such an 
approach, particularly as it relates to private agencies.

CSE privatization
	While doing business with public and private sector entities 
outside the CSE program for such things as laboratory testing for
paternity establishment, service of process, and automated systems 
development is not new in the CSE program, contracting out all of the
program's functions is new. This approach is usually referred to as
privatization.

According to a December 1996 U.S. General Accounting Office (GAO) 
report, 15 States had turned to full-service privatization of 
selected local CSE offices as a way to improve performance that had 
been hampered by growing caseloads, resource constraints, and 
increased Federal requirements. For some localities, privatization 
is also a response to State restrictions on hiring additional public 
employees. In its March 2002 report, the GAO identified 38 private 
firms in 16 states that regularly collected child support payments 
on behalf of individual parents (U.S. General Accounting Office, 
2002.)

In many more States, the State or locality had a contract with a 
private entity to perform one or several services to supplement the
efforts of the State or local program. Most commonly, States contract 
with the private sector for the collection of past-due support, 
especially support considered hard to collect. Under the terms of most
collection contracts, States pay contractors only if collections are 
made and payments to contractors are often a fixed percentage of the 
recovered arrearage payments.

STATE COLLECTION AND DISBURSEMENT OF SUPPORT PAYMENTS

One of the major child support provisions of the 1996 welfare reform 
legislation was the requirement that by October 1, 1998 State CSE 
agencies must operate a centralized, automated unit for collection and 
disbursement of payments on two categories of child support orders: 
those enforced by the CSE agency and those issued or modified after 
December 31, 1993 which are not enforced by the State CSE agency but 
for which the noncustodial parent's income is subject to withholding.

The State disbursement unit must be operated directly by the State CSE 
agency, by two or more State CSE agencies under a regional cooperative 
agreement, or by a contractor responsible directly to the State CSE 
agency. The State disbursement unit may be established by linking 
local disbursement units through an automated information network if
the Secretary of HHS agrees that the system will not cost more, take 
more time to establish, or take more time to operate than a single 
State system. All States, including those that operate a linked 
system, must give employers one and only one location for submitting 
withheld income.

The disbursement unit must be used to collect and disburse support 
payments, to generate orders and notices of withholding to employers, 
to keep an accurate identification of payments, to promptly distribute 
money to custodial parents or other States, and to furnish parents 
with a record of the current status of support payments made after 
August 22, 1996. The disbursement unit must use automated procedures, 
electronic processes, and computer-driven technology to the maximum 
extent feasible, efficient, and economical.

The disbursement unit must distribute all amounts payable within 
2 business days after receiving the money and identifying information 
from the employer or other source of periodic income if sufficient 
information identifying the payee is provided. The unit may retain 
arrearages in the case of appeals until they are resolved.

States must use their automated system to facilitate collection and 
disbursement including at least: (1) transmission of orders and 
notices to employers within 2 days after receipt of the withholding
notice; (2) monitoring to identify missed payments of support; and 
(3) automatic use of enforcement procedures when payments are missed.

The collection and disbursement unit provisions went into effect on  
October 1, 1998. States that process child support payments through 
local courts were allowed to continue court payments until September 
30, 1999.

Following enactment of this provision in August 1996, there was 
widespread misunderstanding about its breadth of application. Thus, 
it is useful to emphasize here that not all child support orders 
must be a part of the State disbursement unit. First, orders issued 
before 1994 that are not being enforced by the State Child Support 
Enforcement Agency are exempt. Second, parents can avoid both wage 
withholding and involvement in the child support enforcement system
if at the time the original order is issued, the judge determines 
that private payment directly between parents is acceptable.

Because of the total loss of CSE funding plus possible loss of TANF 
Block Grant funding for States that are not in compliance with the 
State plan requirement related to State disbursement units, in 
November 1999, Congress passed legislation (Public Law 106-113) that
imposes a lesser alternative penalty for these States. To qualify,
States must have submitted a corrective compliance plan by April l, 
2000, that describes how, by when, and at what cost the State would 
achieve compliance with the State disbursement unit requirement. The 
Secretary of HHS is required to reduce the amount the State would 
otherwise have received in Federal child support payments by the 
penalty amount for the fiscal year. The penalty amount percentage 
is 4 percent in the case of the first fiscal year of noncompliance; 
8 percent in the second year; 16 percent in the third year; 
25 percent in the fourth year; and  30 percent in the fifth and 
subsequent years. If a State that is subject to a penalty achieved 
compliance on or before April l, 2000, the Secretary of HHS was 
required to waive the first year penalty. If a State achieved 
compliance on or after  April 1, 2000, and on or before September 
30, 2000, the penalty percentage was 1. In addition, Public Law 
106-113 provides that States that fail to implement both the CSE 
automated data processing requirement and the State disbursement unit 
requirement are subject to only one alternative penalty process.

BANKRUPTCY AND CHILD SUPPORT ENFORCEMENT

Giving debtors a fresh start is the goal of this country's bankruptcy
system. Depending on the type of bankruptcy, a debtor may be able to 
discharge a debt completely, pay a percentage of the debt, or pay the
full amount of the debt over a longer period of time. However, several
types of debts are not dischargeable, including debts for child 
support and alimony (U.S. Commission on Interstate Child Support, 
1992, p. 209).

The 1975 child support legislation included a provision stating that 
an assigned child support obligation was not dischargeable in 
bankruptcy. In 1978 this provision was incorporated into the uniform 
law on bankruptcy. The bankruptcy law also listed exceptions to 
discharge including alimony and maintenance or support due a spouse, 
former spouse, or child. In 1981, a provision stating that a child 
support obligation assigned to the State as a condition of eligibility 
for Aid to Families with Dependent Children (AFDC) is not
dischargeable in bankruptcy was reinstated. In 1984, the provision 
was expanded so that child support obligations assigned to the State 
as part of the child support program may not be discharged in 
bankruptcy, regardless of whether the payments are to be made on 
behalf of a Temporary Assistance for Needy Families (TANF) or a 
non-TANF family and regardless of whether the debtor was married to 
the child's other parent.

Some noncustodial parents seek relief from their financial obligations
in the U.S. bankruptcy courts. Although child support payments may not
be discharged via a filing of bankruptcy, the filing may cause long 
delays in securing child support payments. Pursuant to Public Law 
103-394, enacted in 1994, a filing of bankruptcy will not stay a
paternity, child support, or alimony proceeding. In addition, child 
support and alimony payments are priority claims and custodial parents 
are able to appear in bankruptcy court to protect their interests 
without having to pay a fee or meet any local rules for attorney 
appearances.

The 1996 welfare reform legislation amends the U.S. Bankruptcy Code 
to ensure that any child support debt that is owed to a State and 
that is enforceable under the CSE Program cannot be discharged in 
bankruptcy proceedings.

AUTOMATED SYSTEMS 

In 1980, Congress authorized 90 percent Federal matching funds on 
an open-ended basis for States to design and implement automated 
data systems. Funds go to States that establish an automated data 
processing and information retrieval system designed to assist in 
administration of the State child support plan, and to control, 
account for, and monitor all factors in the enforcement, collection, 
and paternity determination processes. Funds may be used to plan, 
design, develop, and install or enhance the system. The Secretary 
of HHS must approve the State system as meeting specified conditions
before matching is available.

In 1984, Congress made the 90-percent rate available to pay for the 
acquisition of computer hardware and necessary software. The 1984 
legislation also specified that if a State met the Federal requirement
for 90 percent matching, it could use its funds to pay for the 
development and improvement of income withholding and other procedures
required by the 1984 law. In May 1986, OCSE established a transfer 
policy requiring States seeking the 90 percent Federal matching rate 
to transfer existing automated systems from other States rather than 
to develop new ones, unless there were a compelling reason not to use 
the systems developed by other States.

In 1988, Congress required States without comprehensive statewide 
automated systems to submit an advance planning document to the OCSE
by October 1, 1991, for the development of such a system. Congress 
required that all States have a fully operating system by October 1, 
1995, at which time the  90 percent matching rate was to end. The 
1988 law allowed many requirements for automated systems to be waived
under certain circumstances. For instance, the Secretary of HHS could 
waive a requirement if a State demonstrated that it had an alternative
system enabling it to substantially comply with program requirements. 

As of September 30, 1995, OCSE had approved the automated data systems 
of only six States--Delaware, Georgia, Utah, Virginia, Washington, and 
West Virginia. Most observers agree that States were delayed primarily 
by the lateness of Federal regulations specifying the requirements for
the data systems and by the complexity of getting their final systems 
into operation. Thus, on October 12, 1995, Congress enacted Public Law
104-35 which extended for 2 years, from October 1, 1995 to October 1, 
1997, the deadline by which States were required to have statewide 
automated systems for their child support programs. On October 1, 
1995, however, the 90 percent matching rate was ended; the Federal 
matching rate for State spending on data systems reverted back to the
basic administrative rate of 66 percent.

The purpose of requiring States to operate statewide automated and 
computerized systems is to ensure that child support functions are 
carried out effectively and efficiently. These requirements include 
case initiation, case management, financial management, enforcement,
security, privacy, and reporting. Implementing these requirements 
can facilitate locating noncustodial parents and monitoring child 
support cases. For example, by linking automated child support systems
to other State databases, information can be obtained quickly and 
cheaply about a noncustodial parent's current address, assets, and 
employment status. Systems also can be connected to the court system 
to access information on child support orders (U.S. General Accounting
Office, 1992b).

Under the 1996 welfare reform legislation, States are required to have
a statewide automated data processing and information retrieval system
which has the capacity to perform a wide variety of functions with a 
specified frequency. The State data system must be used to perform 
functions the Secretary of HHS specifies, including controlling and
accounting for the use of Federal, State, and local funds and 
maintaining the data necessary to meet Federal reporting requirements.
The automated system must maintain the requisite data for Federal 
reporting, calculate the State's performance for purposes of the 
incentive and penalty provisions, and have in place systems controls 
to ensure the completeness, reliability, and accuracy of the data. 
Final regulations were issued by the Secretary in August 1998.

The 1996 welfare reform law stipulated that all automatic data 
processing requirements enacted on or before the date of enactment 
of the Family Support Act of 1988 (i.e., October 13, 1988) are to be 
met by October 1, 1997. Second, requirements enacted on or before 
August 22, 1996 must be met by October 1, 2000. The Federal Government
continued the 90 percent matching rate in 1996 and 1997 for provisions
outlined in advanced planning documents submitted before September 30, 
1995.

Also, (pursuant to the 1996 welfare reform law) the Secretary was 
required to create procedures to cap payments to the States at $400 
million for fiscal years 1996-2001. The Federal matching rate for the
new requirements was 80 percent. Funds were to be distributed among 
States by a formula set in regulations which took into account the 
relative size of State caseloads and the level of automation 
needed to meet applicable automatic data processing requirements.

Until fiscal year 2001, the Federal Government paid 80-90 percent of 
approved State expenditures on developing and improving management 
information systems. Congress decided to pay this enhanced match rate 
because data management, the construction of large data bases
containing information on location, income, and assets of child 
support obligors, and computer access to and manipulation of such 
large data bases were seen as the keys to a cost effective child 
support system. In spending the additional Federal dollars on these 
data systems, Congress hoped to provide an incentive for States to 
adopt and aggressively employ efficient data management technology.

Federal funding at the enhanced 80 percent rate (for capped funds) was 
available through fiscal year 2001. The 80 percent Federal matching 
rate for CSE automated systems expenditures was eliminated after
September 30, 2001. For all CSE automated systems expenditures made 
on or after October 1, 2001, Federal funding is available at the 66 
percent Federal matching rate.

The Child Support Performance and Incentive Act of 1998 (Public Law 
105-200), gave the Secretary of HHS an alternative to assessing a
100 percent penalty (i.e., loss of all CSE funding) on States that
failed to comply with the October 1, 1997 statewide automated system
requirements. The alternative penalty is available to States that the
Secretary determines have made and are continuing to make good faith 
efforts to comply with the automated system requirements (and have 
submitted a "corrective action plan" that describes how, by when, and 
at what cost the State will achieve compliance with the automated 
system requirements). The alternative percentage penalty is equal to 
4, 8, 16, 25, and 30 percent respectively for the first, second, 
third, fourth, and fifth or subsequent years of failing to comply 
with the data processing requirements. The percentage penalty is 
to be applied to the amount payable to the State in the previous 
year as Federal administrative reimbursement under the child support
program (i.e., the 66 percent Federal matching funds). A State that
fails to comply with the 1996 automated system requirements 
nonetheless may have its annual penalty reduced by  20 percent for 
each performance measure under the new incentive system for which it
achieves a maximum score. Thus, for example, a State being penalized 
would have its penalty for a given year reduced by 60 percent if it 
achieved maximum performance on three of the five proposed 
performance measures. Further, the Secretary is to reduce the annual 
penalty amount by 90 percent in the year in which a State achieves 
compliance with the automated system requirements. These alternative 
penalties apply to all CSE automated system requirements (i.e., those 
required by both Public Law 100-485 and Public Law 104-193). However, 
Public Law 105-200 only allows the Secretary to impose one penalty in 
any given year. This means that if a State was not in compliance in 
fiscal year 2000 with either the 1988 automated system requirements 
or the 1996 requirements, it would be only penalized once.  The 1998 
law also stipulates that because States are subject to the alternative 
penalty procedures for violations of the CSE automated system 
requirements, they are exempt from the TANF penalty procedure for 
such violations.

As of March 2003, 4 jurisdictions had not been certified as meeting 
the  1988 Family Support Act CSE automated systems requirements; 
2 States had not yet scheduled a certification review and were still 
in the planning phase (California and South Carolina) and 2 juris-
dictions had a review pending (Michigan and the Virgin Islands).

As noted earlier, the 1996 welfare reform law required States to 
modify their automated systems to accommodate the 1996 law provisions.
As of March 2003, 21 jurisdictions were certified as meeting the 1996 
Personal Responsibility and Work Opportunity Reconciliation Act CSE 
automated systems requirements (Arkansas, Colorado, District of 
Columbia, Georgia, Hawaii, Indiana, Iowa, Kansas, Maryland, Missouri, 
Nevada, New Mexico, North Carolina, North Dakota, Oklahoma, Oregon, 
Pennsylvania, Texas, Virginia, Washington, and Wyoming); 30 
jurisdictions had a review scheduled or in progress; and 3 States did 
not have a review scheduled yet (California, Massachusetts, and 
South Carolina).

AUDITS AND FINANCIAL PENALTIES

Audits are required at least every 3 years to determine whether the 
standards and requirements prescribed by law and regulations have been
met by the child support program of every State. If a State fails the 
audit, Federal TANF funds must be reduced by an amount equal to at 
least 1 but not more than 2 percent for the first failure to comply, 
at least 2 but not more than 3 percent for the second failure, and 
at least 3 but not more than 5 percent for the third and subsequent 
failures.

If a penalty is imposed after a follow up review, a State may appeal 
the audit penalty to the HHS Departmental Appeals Board. Payment of 
the penalty is delayed while the appeal is pending. The appeals board 
reviews the written records which may be supplemented by informal 
conferences and evidentiary hearings.

The penalty may be suspended for up to 1 year to allow a State time to 
implement corrective actions to remedy the program deficiency. At the 
end of the corrective action period, a followup audit is conducted in 
the areas of deficiency. If the followup audit shows that the 
deficiency has been corrected, the penalty is rescinded. However, if 
the State remains out of compliance with Federal requirements, a 
graduated penalty, as provided by law, is assessed against the  State. 
The actual amount of the penalty--between one and five percent of the 
State's TANF matching funds (see above)--depends on the severity and 
the duration of the deficiency. If a State is under penalty, a 
comprehensive audit is conducted annually until the cited deficiencies
are corrected (Office of Child Support, 1994, pp. 17-19).

The 1996 welfare reform law required States to annually review and 
report to the Secretary of HHS, using data from their automatic data
processing system, both information adequate to determine the State's 
compliance with Federal requirements for expedited procedures and case 
processing as well as the information necessary to calculate their 
levels of accomplishment and rates of improvement on the performance 
indicators.

The Secretary is required to determine the amount (if any) of 
incentives or penalties. He also must review State reports on 
compliance with Federal requirements and provide States with 
recommendations for corrective action. The purpose of the audits is to 
assess the completeness, reliability, and security of data reported 
for use in calculating the performance indicators and to assess the 
adequacy of financial management of the State program.

In addition to the 1-5 percent penalty for States that the Secretary 
of HHS  has found, via an audit, to have failed to substantially 
comply with CSE State plan requirements, there is the possibility 
of complete elimination of CSE funding in cases in which a State's 
CSE program has been disapproved. The Secretary must disapprove the 
plans of States which fail to implement the CSE State plan 
requirements under sections 454 and 466 of the Social Security Act. 
Disapproval of a State's plan will result in the cessation of all 
Federal child support funding for the State. In addition, because 
operating an approved Child Support Enforcement program is a 
prerequisite to a State's receiving funds under the TANF program, 
a State's TANF funds also would be terminated. (See above sections 
on Automated Systems and State Collection and Disbursement of 
Support Payments for more details.)

As mentioned elsewhere in this chapter, there are two exceptions to 
the complete elimination of Federal funding rule. First, CSE law
establishes an alternative penalty for a State's failure to meet the 
automated data systems requirements. Second, CSE law (Public Law 
106-113) establishes an alternative penalty for a State's failure to 
meet the automated centralized disbursement unit requirements.

ASSIGNMENT AND DISTRIBUTION OF CHILD SUPPORT COLLECTIONS

Two parties have claims on child support collections made by the 
State. The children and custodial parent on behalf of whom the 
payments are made, of course, have a claim on payments by the 
noncustodial parent. However, in the case of families that have 
received public aid, taxpayers who paid to support the destitute 
family by providing a host of welfare benefits also have a 
legitimate claim on the money.

Since the child support program's inception, the rules determining the 
distribution of arrearage payments have been complex, but not nearly 
as complicated as they are currently. It is helpful to think of the 
rules in two categories. First, there are rules in both Federal and 
State law that stipulate who has a legal claim on the payments owed by
the noncustodial parent. These are called assignment rules. Second, 
there are rules that determine the order in which child support 
collections are paid in accord with the assignment rules. These are 
called distribution rules.

DISTRIBUTION OF PAYMENTS WHILE THE FAMILY RECEIVES PUBLIC ASSISTANCE

When a family applies for TANF, the custodial parent must assign to 
the State the right to collect both current child support payments and 
past-due child support obligations which accrue while the family is on 
the TANF rolls. Arrearages that accrued to the family before it went 
on public assistance are called "preassistance" arrearages; those that 
accrue while the family is on public assistance are called 
"permanently-assigned arrearages."  While the family receives TANF 
benefits, the State is permitted to retain any current support and any 
arrearages it collects up to the cumulative amount of TANF benefits 
which has been paid to the family. Before the 1996 reforms, States were 
required by Federal law to pay (or "pass through") the first $50 of 
child support collections to the family. This provision was repealed by 
the 1996 legislation and States were given the right to decide for 
themselves how much, if any, of their collections would be passed 
through to the family, although they must pay the Federal share of 
collections. Thus, amounts passed through come entirely out of the 
State share of collections. States also have the right to decide 
whether they treat any child support passed through to the family as 
income, in which case the child support collections may reduce or even 
eliminate TANF payments to the family.

DISTRIBUTION OF PAYMENTS AFTER THE FAMILY LEAVES PUBLIC ASSISTANCE

Distribution rules after the family leaves public assistance are far 
more complicated. Most of the problems stem from the requirements that 
preassistance arrears be assigned to the State, and that certain 
arrearages otherwise owed to the former welfare family are deemed to 
be owed to the State when the collection is made by Federal tax refund
intercept.

When a family leaves welfare, States are required to keep track of six 
categories of arrearages: (1) permanently assigned; (2) temporarily 
assigned; (3) conditionally assigned; (4) never assigned; (5) 
unassigned during assistance; and (6) unassigned preassistance. On 
the computer, these different categories are called "buckets." The 
money shifts among the buckets according to the source of the 
collection, the family's status on or off assistance when the 
arrearage accrued, the amount of the unreimbursed public assistance
balance, and the date of the assignment of support rights as well as 
the date the TANF case closed (because of phased-in implementation 
dates). Moreover, the distribution rules differ depending on whether 
the family went on welfare before or after October 1, 1997.  Families 
that assigned their rights to preassistance arrearages to the State 
before October 1, 1997, have "permanently-assigned arrearages," which 
are owed to the State. Families that assign their rights to 
preassistance arrearages to the  State on or after October 1, 1997, 
have "temporarily-assigned arrearages." Temporarily-assigned 
arrearages and permanently-assigned arrearages are treated 
differently after a family leaves public assistance. Temporarily-
assigned arrearages become "conditionally-assigned arrearages" when 
the family leaves welfare or on October 1, 2000, whichever is later. 
These are called conditionally- assigned arrearages because, as will 
be seen below, if they are collected by Federal tax refund intercept,
they will be paid to the State, not the family.

There are also categories for "never-assigned arrearages," which 
accrue after the family's most recent period of assistance ends. These
can become temporarily-assigned arrearages if the family goes back on
public assistance. In addition, there are "unassigned during 
assistance arrearages" and "unassigned preassistance arrearages." 
These are previously assigned arrearages which exceed the cumulative 
amount of unreimbursed assistance when the family leaves public 
assistance, and which accrued either during (unassigned during 
assistance arrearages) or prior to (unassigned preassistance 
arrearages) receipt of assistance.

When the family leaves public assistance, the order of distribution of 
any collection depends not only on when the arrearages accrued--
preassistance, during-assistance, or postassistance--and when they 
were assigned, but also on when and how the past-due support was
collected. If the collection was made by any means other than the 
Federal tax refund intercept, the collection is first paid to the 
family up to the amount of the monthly child support obligation. Any 
remaining collection is distributed to certain categories of 
arrearages owed to the family (conditionally assigned, never 
assigned and unassigned preassistance), and then to arrearages 
owed to the State (permanently assigned), with the remainder to 
the family (unassigned during assistance).

Once current support is paid, collections on past-due support made 
between October 1, 1997, and September 30, 2000, or earlier at State 
option, are paid to the family to satisfy any arrearages that accrued 
to the family after leaving public assistance (never-assigned 
arrearages). Once never-assigned arrearages are satisfied, the 
collection is to be applied either to other arrearages owed to the  
family or to the State (permanently-assigned arrearages). A family 
that leaves welfare before October 1, 2000, maintains its permanently-
assigned arrearages, that is, those which accrued before the family 
went on welfare and while the family received public assistance. These
arrearages are always owed to the State and, unlike temporarily-
assigned arrearages, never revert to the family.

On October 1, 2000, the rules changed again (although States could opt 
to implement these changes sooner). As noted above, the temporarily-
assigned arrearages for a former welfare family that leaves public 
assistance on or after October 1, 2000, or when the case closes, 
whichever is later, become "conditionally-assigned arrearages." The 
distribution of these conditionally-assigned arrearages is 
"conditioned" upon whether the money is collected by Federal tax 
refund intercept or by some other method, such as levy of a bank 
account, a workers compensation lump sum payment, or a payment 
agreement to avoid a driver's license revocation. If the collection 
is from a tax refund intercept, it will be paid to the State rather 
than to the family, up to the cumulative amount of unreimbursed 
assistance. The distribution from any other method of collection is 
first made to the family, with current support being paid first and 
any balance allocated to any arrearages.

FUNDING OF STATE PROGRAMS

The child support program conducted by States is financed by three 
major streams of money. The first and largest is the Federal 
Government's commitment to reimburse States for 66 percent of all 
allowable expenditures on child support activities. Allowable 
expenditures include outlays for locating parents, establishing 
paternity (with an exception noted below), establishing orders, and
collecting payments.
There are two mechanisms through which Federal financial control of 
State expenditures is exercised. First, States must submit plans to 
the Secretary of HHS outlining the specific child support activities 
they intend to pursue. The State plan provides the Secretary with the 
opportunity to review and approve or disapprove child support 
activities that will receive the 66 percent Federal reimbursement. 
Second, as discussed previously, HHS conducts a financial audit of 
State expenditures.

In addition to the general matching rate of 66 percent, the Federal 
Government provides 90 percent matching for one especially important 
child support activity. Congress provides 90 percent funding for 
laboratory costs incurred in determining paternity.  Congress 
justified enhanced funding of paternity tests because paternity 
establishment is an activity vital to successful child support 
enforcement. 

Historically, establishing paternity in cases of births outside 
marriage has proven to be surprisingly difficult. Especially since the 
1960s, more and more children have been born outside marriage; today a 
third of all children are born to unwed mothers, and nearly 50 percent 
of these babies wind up on welfare. Thus, establishing paternity has 
become more and more important because a growing fraction of the 
welfare caseload is children whose paternity has not been established. 
Congress hopes to stimulate the use of blood or DNA tests as a way of 
improving State performance in establishing paternity, especially 
given that  recent experience in the States shows that many men 
voluntarily acknowledge paternity once blood or DNA tests reveal a 
high probability of their paternity.

In addition to the Federal administrative matching payments, the 
second stream of financing for State programs is child support 
collections. As we have seen, when mothers apply for welfare, they 
assign the child's claim rights against the father to the State. As 
long as the family receives TANF payments, the State can retain all 
child support payments. As explained in detail above in the section 
on distribution of child support payments, States retain the right to 
pursue repayment for TANF benefits from the parent who owes child 
support even after the family leaves welfare.

Recovered payments are split between the State and the Federal 
Government in accord with the percentage of Federal reimbursement of 
Medicaid benefits. In the Medicaid Program, the Federal Government 
pays States a percentage of their expenditures that varies inversely 
with State per capita income--poor States have a high Federal 
reimbursement percentage; wealthy States have a lower Federal 
reimbursement percentage. Mississippi, for example, one of the poorest 
States, receives a reimbursement of about 77 percent for its Medicaid 
expenditures. By contrast, States like California and New York that 
have high per capita income receive the minimum Federal reimbursement 
of 50 percent. Though TANF is not a matching grant program, the 
Federal Government and the States still share the costs of providing 
help to needy families with children. 

TANF includes a maintenance-of-effort (MOE) requirement that requires 
States to expend at least 75 percent (80 percent if they fail to meet 
TANF work requirements) of what they spent under prior law programs 
in fiscal year 1994 on families with children that meet TANF 
eligibility requirements. The fact that the Federal Government and 
the States split the costs of TANF explains why States  are required 
to split child support collections from TANF cases with the Federal 
Government. The rate at which States reimburse the Federal Government 
is the Federal Medicaid matching rate. The details of this cost-
recovery procedure mean that poorer States are rewarded less for their 
CSE efforts than wealthier States. The third stream of child support 
financing is Federal incentive payments. The current incentive system 
is designed to encourage States to collect child  support from both 
TANF and non-TANF cases.

Public Law 105-200, the Child Support Performance and Incentive Act 
of 1998 (enacted July 16, 1998), replaced the old incentive payment 
system with a new cost-neutral system of incentive payments that 
provides: (1) incentive payments based on a percentage of the State's 
collections (with no cap on non-TANF collections); (2) incorporation 
of five performance measures related to establishment of paternity 
and child support orders, collections of current and past-due support 
payments, and cost-effectiveness; (3) mandatory reinvestment of 
incentive payments into the CSE Program; and (4) an incentive payment 
formula weighted in favor of TANF and former TANF families.

The new incentive system was phased in between fiscal year 2000 and 
fiscal year 2002. The system caps the Federal incentive pool, thereby 
forcing States for the first time to compete against each other for 
incentive dollars. Under the new incentive system, a State may be 
eligible to receive an incentive payment for good performance. The 
total amount of the incentive payment received by a State depends on 
four factors: (1) the total amount of money available in a given 
fiscal year from which to make incentive payments; (2) the State's 
success in making collections on behalf of its caseload; (3) the 
State's performance in five areas (mentioned earlier); and (4) the 
relative success or failure of other States in making collections 
and meeting these performance criteria.

The incentive payment no longer comes out of the gross Federal share 
of child support collected on behalf of TANF families. Instead, 
Public Law 105-200 required the Secretary of HHS to make incentive 
payments to States.   This law stipulated that the incentive payment 
pool could not exceed $422 million for fiscal year 2000; $429 million 
for fiscal year 2001; $450 million for fiscal year 2002; $461 million 
for fiscal year 2003; $454 million for fiscal year 2004; $446 million 
for fiscal year 2005; $458 million for fiscal year 2006; $471 million 
for fiscal year 2007; and $483 million for fiscal year 2008. For years 
after fiscal year 2008, the incentive pool is increased to reflect 
changes in inflation in the previous year as measured by the Consumer 
Price Index.

Given this overview of the three streams of money that support State 
CSE programs, we can now examine the basic financial operations of the 
child support system. Table 8-4 summarizes both child support income 
and expenditures for every State. The first three columns show State 
income from each of three funding streams just described; the fourth 
column shows State spending on child support. As demonstrated in the 
fifth column, the sum of the three streams of income exceeded 
expenditures in some 8 States in fiscal year 2002. In other words, 
some


TABLE 8-4--FINANCING OF THE FEDERAL/STATE CHILD SUPPORT ENFORCEMENT
PROGRAM, FY 2002  




[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]


States still make a profit on their child support program. States are 
free to spend the State share of collections in any manner the State 
sees fit, but States must spend Federal incentive payments solely on 
the CSE program or on activities approved by the Secretary of HHS 
which contribute to the effectiveness or efficiency of the CSE 
program.

The method of financing child support enforcement has received 
considerable attention in recent years. One of the most important
issues is that States have little incentive to control their 
administrative spending. The last column of Table 8-4 presents a 
measure of State program efficiency obtained by dividing total 
collections by total administrative expenses. The table shows the 
dramatic differences among States in how much child support is 
collected for each dollar of administrative expenditure--a crude 
measure of efficiency-- ranging from only $0.96 in New Mexico to 
$6.91 in South Dakota. Fifteen States, including States  that spend up 
to two times as much per dollar of collections as more efficient 
States, still make a profit on the program.

Table 8-5 shows one consequence of child support's financing system. 
The first two columns of the table show the net impact of program 
financing on the Federal and State governments respectively. The 
Federal Government has spent more money on child support every year 
since 1979, with spending rising from $43 million in 1979 to $2.327 
billion in 2001, and dropping slightly to $2.252 billion in 2002.

State governments until recently always made a profit on the program.  
Beginning in fiscal year 2000 they too have experienced aggregate ]
losses every year. In 1979, the first year for which data are 
available, States in the aggregate cleared $244 million. In 1993, 
the peak year, States cleared $482 million. In fiscal year 2000, 
States in the aggregate lost $87 million; in 2001, States lost  
$272 million; and in 2002, States lost $463 million.

The last column in Table 8-5 portrays an unfortunate historical 
progression  in child support financing. Beginning in the very first 
year of the child support program and for nearly a decade thereafter, 
the net impact of Federal spending and State profits was a net savings 
for taxpayers. Thus, in 1979, State savings more than made up for 
Federal spending.  As a result, from a public finance perspective, 
taxpayers were ahead by $201 million (see last column). Total 
Federal and State child support expenditures, in other words, were 
more than offset by collections from parents whose children had been 
supported by AFDC payments.  These AFDC collections were retained and 
used to reimburse the Federal and State governments for previous AFDC
expenditures. The savings produced in this manner exceeded overall 
expenditures.

	However, net public savings declined over the years. A major 
explanation for the negative public savings was that beginning in 1985, 
as explained above, new Federal legislation required States to give 
the first $50 per month of collections in welfare cases to the 
custodial parent. This $50 pass through had an immediate 


TABLE 8-5--FEDERAL AND STATE SHARE OF CHILD SUPPORT "SAVINGS," 
SELECTED FISCAL YEARS 1980-2002 



[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]



impact; in its first year (1985), combined Federal- State savings fell 
to $86 million from $261 million the previous year. By 1989 the 
overall "savings" in the combined program went negative. For the 
first time that year, Federal expenditures exceeded State gains--by 
$77 million. The net losses have increased almost every year, 
reaching $852 million in 1995 before declining somewhat to $738 
million in 1996. In 2002, the net loss had reached $2.715 billion.
	Reflecting on these numbers, two perspectives should be 
considered. One perspective, the finance perspective, attends simply 
to the measurable costs and benefits of the child support program. 
But a second, broader perspective includes more diffuse social 
benefits of child support that are difficult to measure.
	From the finance perspective, perhaps the most important 
question about child support financing is why the Federal Government 
should provide such a high reimbursement level for State expenditures 
when some States still make a profit on their child support program. 
In the past, this issue has prompted Congress to reduce the basic 
administrative reimbursement rate on several occasions. As a result, 
the rate has declined from its original level of 75 percent to 66 
percent. But some Members of Congress have suggested that, because 
some States are still making a profit while the Federal Government is 
losing money, Congress should reduce the Federal administrative 
reimbursement rate below 66 percent.  Defenders of child support 
financing respond by pointing out that allowing States to profit from 
the program makes it very popular with State policymakers who control 
funding of the State share of expenditures. Without financing 
arrangements favorable to State interests, according to this view, the 
child support program would not have posted the impressive gains that 
have characterized the program since its inception in 1975. Moreover, 
many defenders of the current financing structure view retained 
collections as reimbursement for a portion of a State's welfare 
expenditures, rather than "income" to the State. In fiscal year 2001 
the State's share of retained collections accounted for just 6 percent 
of all States' expenditures on TANF. 

	The 66 percent Federal 
reimbursement of State administrative expenditures raises a second 
issue of program financing: Why is such a large percentage of State 
expenditures financed without regard to performance? Even if States 
spend a great deal of money on activities of dubious value in 
collecting child support, they can nonetheless count on 66 percent 
reimbursement from the Federal Government. The flat 66 percent 
reimbursement rate may provide States with an incentive to spend 
money inefficiently. A potential solution would be for the Federal 
Government to provide States with less money based on gross spending 
and relatively more money based on performance.
	However, some critics of child support financing question 
whether  incentives should be provided for non-TANF collections. With 
regard to program financing, there is a striking difference between 
the TANF and non-TANF programs; namely, government retains part of 
TANF collections but non-TANF collections are given entirely to the 
family. When Congress enacted the Child Support Enforcement program 
in 1975, the floor debate shows that members of the House and Senate 
supported the program primarily because retaining welfare 
collections would help offset welfare expenditures.

	But program trends since 1975 show that the non-TANF program 
is actually much bigger than the TANF program and grows faster each 
year than the TANF program. As shown in Table 8-1 above, welfare 
collections increased from about $0.5 billion in 1978 to a high point 
of $2.9 billion in 1996, a growth factor of five. Between 1996 and 
2002, welfare collections actually declined somewhat  (to $2.5 
billion in 1999) and then increased back to $2.9 billion in 2002. 
But non-TANF collections have grown steadily from about $0.6 billion 
to $17.2 billion over the period 1978-2002, for a growth factor of 
about 28.
	The point here is that non-TANF collections are growing much 
faster than TANF collections and probably will continue to do so in 
light of the 1996  welfare reforms. And since the State and Federal 
Governments receive virtually no direct reimbursement for non-TANF 
expenditures, the child support program loses more and more money 
every year. Why, then, critics ask, should the Federal Government 
encourage greater expenditures by providing incentives for non-TANF 
collections. Ignoring for the moment possible social benefits from 
the non-TANF program and based entirely on a finance perspective, 
some critics argue that non-TANF incentives encourage inefficiency.
	Another issue regarding program financing is whether 
government should pay such a high percentage of costs in the non-
TANF program. States must charge an application fee that can be no 
more than $25 for the non-TANF program, but this amount doesn't even 
pay the full cost of opening a case file. In 2001, a little more 
than 3.2 million non-TANF families (i.e., families that had never 
been on TANF) received services resulting in child support 
collections that averaged around $3,130 per case. By collecting 
this money, government is providing a useful service to millions 
of families, many of which are not poor. Rather than have taxpayers 
pick up the cost of this service, some critics argue that families 
receiving the services should pay more of the costs. Federal 
law allows States to charge additional fees, but few do so. States 
argue that, because many of the non-TANF families are poor or low-
income, charging them for child support services would decrease their 
already tenuous financial stability. States also argue that setting  
up an administrative system to establish and collect the fees would 
cost more money than the fees actually collected.  Additionally, 
others have pointed out that child support collections often 
represent the enforcement of court orders, and the public is not 
directly charged for other forms of law enforcement.
	The account of child support from the finance perspective 
given above relies on measurable spending and collections. However, 
defenders of the current child support program argue that it may 
produce social benefits that are not captured by mere spending and 
collections data. These program defenders claim that a strong child 
support program produces "cost avoidance" by demonstrating to 
noncustodial parents who would try to avoid child support that 
the system will eventually catch up with them.
	Although currently there is only modest evidence that would 
allow an estimate of the cost avoidance effect (Wheaton & Sorensen, 
1998; see also: Barnow, Dall, Nowak, Dannhausen, 2000), there is 
nonetheless good reason to believe that at least some noncustodial 
parents make child support payments in  part because they fear 
detection and prosecution. Even more to the point, a strong child 
support program may change the way society thinks about child 
support. As in the cases of civil rights and smoking, a persistent 
effort over a period of years may convince millions of Americans, 
both those who owe child support and those concerned with the 
condition of single-parent families, that making payments is a 
moral and civic duty. Those who avoid it would then be subject to 
something even more potent than legal prosecution--social ostracism.

To the extent that this reasoning is correct, the public and 
policymakers may come to regard child support enforcement as a long-
term investment similar in many respects to education, job training, 
and other policies that help families support their children. In each 
of these cases, there is the expectation that society will be better 
off in the long run because the government invests in helping 
individuals and families. But the expectation that investments will 
lead to immediate payoffs, or even that we can devise evaluation 
methods that adequately capture the long-term payoffs, is a much lower 
criterion of success than the expectation of immediate and measurable 
payoffs that characterizes the kind of public finance reasoning 
outlined above. Of course, even if the public is willing to continue 
paying for child support enforcement as a social investment, Congress 
and child support administrators may nonetheless find it desirable to 
intensify their efforts to make the program as efficient as possible.

HOW EFFECTIVE IS CHILD SUPPORT ENFORCEMENT?

Since the inception of the Federal-State child support program in 
1975, there appears to have been growing public awareness of the 
problem of nonpayment of child support and increased willingness by 
taxpayers to spend money trying to improve child support enforcement. 
As measured either by expenditures or total collections, the Federal-
State program has grown rapidly since 1978. To the extent that private 
arrangements fail to ensure child support payments, our laws and, 
increasingly, our practices bring child support cases into the public 
domain. In view of these changes in law and practice, it seems useful 
to provide a broad assessment of the performance of the Nation's child 
support system in general and of the CSE program (Title IV-D of the 
Social Security Act) in particular.

IMPACT ON TAXPAYERS

One useful measure of the Federal-State program is the impact of 
collections on TANF costs. As outlined above, States retain and split 
with the Federal Government child support collections from parents 
whose children are on TANF. In addition, States often can retain 
part of collections from parents whose children were on TANF in the 
past as repayment for taxpayer-provided TANF benefits. As shown in 
Table 8-1 above, after a long period of steady growth TANF 
collections declined from a high of nearly $2.9 billion in 1996 to 
$2.5 billion in fiscal year 1999 and increased back to $2.9 billion 
in fiscal year 2002. Despite its many successes, the overall 
financial impact of the child support program on taxpayers is 
negative. As shown in Table 8-5, program expenses totaled $2.7 
billion in 2002.

IMPACT ON POVERTY

In 2001, about 23 percent of the 13.4 million women and men rearing 
children alone had incomes below the poverty level. By comparison,  
19 percent of the custodial parents who received child support 
payments had incomes below the poverty level (U.S. Census Bureau, 
2003a, detailed Table 4). Thus, child support appears to be associated 
with a modest reduction in poverty. If the child support program could 
collect support for a substantial fraction of the additional 7.3 
million single parents who did not receive payments in 2001, the 
antipoverty impact of the program could be substantially improved.
Despite the modest impact of child support on poverty, many families 
on welfare have received enough of a financial boost from child support 
payments that they were able to leave the rolls. In 2001, 330,000 
families with child support collections, representing about 16 percent 
of the welfare caseload, became ineligible for TANF. Similarly, about 
3 percent of families in the non-TANF child support program were lifted 
out of poverty by child support payments. This 3 percent figure is more 
impressive than it appears at first because a substantial fraction of 
the non-TANF caseload had incomes above the poverty level before 
receiving any child support payments. For most of these nonpoor 
families, incomes and standards of living were improved by child 
support payments. Presumably, even poor families that received child 
support but remained in poverty had their standard of living improved 
by the child support payments.

IMPACT ON NATIONAL CHILD SUPPORT PAYMENTS

	Perhaps the most important measure of the Federal-State 
program is its impact on overall national rates of paying child 
support. Although the original intent of Congress in creating the 
child support program was primarily to offset welfare payments, both 
Congress and the American public have come to see the program as a 
means of improving the Nation's system of ensuring that all parents 
who no longer live with their children continue to provide for their 
financial support.

The U.S. Census Bureau periodically collects national survey 
information on child support. By interviewing a random sample of 
single-parent families, the Census Bureau is able to generate a host 
of numbers that can be used to assess the performance of noncustodial 
parent in paying child support.

Table 8-6 provides detailed information for 2001, the most recent year 
for which national data are available, on child support payments by 
fathers to families headed by mothers. Although the 2001 survey, like 
1999, 1997, 1995, 1993, and 1991 surveys, included custodial fathers, 
the following discussion is focused solely on custodial mothers. 
Several points bear emphasis, the most important of which is that 
many female-headed families do not receive child support. As shown 
in the bottom row of the upper panel in Table 8-6, of the 11.3 million 
female-headed families eligible for support, only 63 percent even 
had a support award. Most observers would say that a major failure of 
the Nation's child support system is that entirely too many mothers 
do not have a child support award.

	Of the 6.2 million mothers who had an award and who were 
supposed to receive payments in 2001, 75 percent actually received at 
least one payment (Table 8-6).  However, as shown in Table 8-7, only 
about 41 percent of the total of 11.3 million women who did not live 
with their children's father in 2001 actually received at least one 
payment and only 25 percent received everything due. So  in addition 
to its failure to get orders for 37 percent of eligible mothers, 
critics assert that a second failure of the child support system 
is that a large proportion of the money owed is not paid.

TABLE 8-6--CHILD SUPPORT PAYMENTS AWARDED AND RECEIVED BY WOMEN WITH 
CHILDREN PRESENT, BY SELECTED CHARACTERISTICS, 2001


[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]


	Table 8-6, which also summarizes child support information by 
ethnic group, by years of schooling, and by poverty level, suggests a 
number of interesting and important features of child support payments.
White mothers are more likely to have a support order than black or 
Hispanic mothers (67 percent versus 54 percent for blacks and 52 
percent for Hispanics). Similarly, mothers with a bachelors degree 
have a  70 percent chance of having an order as compared with 48 
percent for high school dropouts and 63 percent for high school 
graduates. As for payments, white mothers receive $4,592 per year on 
average as compared with $3,043 for black mothers and $4,014 for 
Hispanic mothers. Mothers with a bachelor's degree receive $6,239 per 
year in support as compared with $2,934 and $3,831 for high school 
dropouts and graduates respectively.
	Clearly, mothers who are already financially worse off get 
less from child support than mothers who are financially better off. 
This generalization is made especially clear by two further pieces of 
information depicted in the table. First, never-married mothers, one 
of the poorest demographic groups in the Nation, are less likely to 
have an award than divorced mothers (52 percent versus 72 percent); 
even never-married mothers who actually receive support get 
considerably less than divorced mothers ($2,864 versus $5,148). 
Second, as shown by the data at the bottom of the table, poor mothers 
are less likely to have orders and receive less money than non-poor 
mothers. Table 8-8 shows similar data for the award of health 
insurance. While demonstrating that about 59 percent of all mothers 
have health insurance included in their award, the table also shows 
that the probability of health insurance coverage is greatly reduced 
for never-married women (43 percent),  black (40 percent) and Hispanic 
women (50 percent), and women with less schooling (i.e., high school 
dropouts, 44 percent).

Table 8-7, which summarizes several child support measures for 
selected years from 1978 to 2001, complements and puts into context 
the conclusions drawn from the 2001 data.   The pattern of poor 
women being less likely to have an order and receive support is 
nothing new; but the years since 1978 show a narrowing of the 
difference. The percentage of poor women who had an order was up 
46 percent over the 23-year period, compared with a decline of 
3 percent among women above the poverty level. Similarly, the 
percentage of poor women who received child support payments 
increased 76 percent from 1978 to 2001, compared to an increase of 
8 percent among non-poor women. The percentage of all women with an 
award and the percentage that actually receive any payment have 
grown only slightly, and in each case by far less than the rate of 
growth in the number of demographically eligible mothers. Equally 
discouraging, while a slightly higher percentage of women were awarded 
child support (63.0 percent in 2001 versus 59.1 percent in 1978), the 
percentage of women who received full payment remained virtually 
unchanged (25 percent in 2001 versus 24 percent in 1978).
	In summary, it appears that the performance of the Nation's 
child support system is modest and that only a few performance 
measures have improved over two decades. However, as shown in Table 
8-1, the Federal-State child support program has shown improved 
performance on a number of important measures virtually every year 
since 1978. To compare performance changes in the IV-D program with 
overall national trends in child support performance, Table 8-9 
summarizes measures from both the IV-D program as revealed in reports 
from the Office of Child Support Enforcement (OCSE) and the national 
system of child support as revealed in U.S. Census Bureau Surveys. The 
data are surprising and, at first, confusing. As shown in the top 
panel, the Federal-State program is showing impressive improvement 
on every measure. Total collections, parents located, paternities 
established, and awards established are up over 275 percent since 1978.


TABLE 8-7--CHILD SUPPORT PAYMENTS FOR ALL WOMEN, WOMEN ABOVE THE 
POVERTY LEVEL, AND WOMEN BELOW THE POVERTY LEVEL, SELECTED YEARS 
1978-2001


[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]




	By contrast, the measures of overall national trends show 
little improvement. In fact, the likelihood of having an award, being 
legally entitled to a payment, and receiving at least one payment have 
been nearly stagnant. Moreover, the percentage of mothers who received 
the full amount due has decreased from 49 percent to 45 percent. On 
the other hand, total collections (for custodial mothers) increased by 
78 percent. This increase, however, is dwarfed by the 631 percent 
increase in IV-D collections. The increase must also be interpreted in 
view of the fact that the number of single mothers demographically 
eligible for child support increased by over 59 percent over the same 
period.


TABLE 8-8 CHILD SUPPORT AWARD STATUS AND INCLUSION OF HEALTH INSURANCE 
IN AWARD, BY SELECTED CHARACTERISTICS OF WOMEN, 2001


[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]



	Clearly, although the IV-D program has been growing steadily 
since 1978, and its performance on many measures has been improving, 
the improvement appears to have had only modest impact on the national 
picture. How can these two trends be reconciled?
	The last panel of Table 8-9 suggests an answer as it shows 
collections by the Federal-State program as a percentage of overall 
national child support payments. 

In 1978, less than one-fourth of child support payments were collected 
through the IV-D program. By 2001, the percentage had grown to 87 
percent. The implication of this trend is that the IV-D program may be 
recruiting more and more cases from the private sector, bringing them 
into the public sector, providing them with subsidized services (or 
substituting Federal spending for State and local spending), but not 
greatly improving overall collections. Whatever the explanation, it 
seems that improved effectiveness of the CSE program has not led to 
significant improvement of the Nation's child support performance. 

Two additional statistics must be considered in any general assessment
of national child support payments. First, according to Sorensen 
(1997), noncustodial parents owe over $30 billion in overdue child 
support. Some perspective on the magnitude of this figure is provided 
by recalling that the entire Federal outlay on the Temporary 
Assistance for Needy Families (TANF) welfare program in 1999 was about 
$16.5 billion.
	But many critics of the child support system contend that this 
figure on arrearages, which is based on child support orders currently 
in place, is actually an underestimate of the shortcomings of the 
Nation's child support system. These critics hold that too few 
noncustodial parents have orders, that the amount of orders is too low, 
and that not enough of the amount owed is actually paid. 
Considerations of this sort have led to several studies of what might 
be called "child support collections potential," the amount that could 
be collected by a perfectly efficient child support system.
	The most recent of these studies, conducted by researchers at 
the Urban Institute (Sorensen, 1997), produced the estimate that $51 
billion could be collected in child support each year. The assumptions 
underlying this estimate are that all custodial parents had an order, 
that payments were made in accordance with the Wisconsin guidelines 
(17 percent for one child, 25 percent for two children, 29 percent for 
three children, 31 percent for four children, and 34 percent for five 
or more children), and that the full amount of every order was 
actually paid.  Of course, no one expects any program to be perfectly 
efficient. Even so, comparing the $51 billion that could be generated 
by a perfect system with the actual payments of around $19 billion in 
2001 provides a useful index of how far we need to go as a



TABLE 8-9--COMPARISON OF MEASURES OF IV-D EFFECTIVENESS WITH CENSUS 
CHILD SUPPORT DATA, SELECTED YEARS 1978-2001




[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]




Nation if we are to provide custodial parents and children with the 
measure of financial security that is the major goal of our child 
support system.
	Finally, there does appear to be one area in which the 
Federal-State program is having some success. As discussed in detail 
in Appendix M, Nonmarital births have exploded since the 1960s. 
These cases are the most difficult ones in which to establish a 
child support order and make collections. Because there are more 
and more of these difficult cases each year, improved performance 
with other types of cases is being masked to some degree. Despite 
the difficulty of those cases, the Federal-State program has increased 
the probability of collections for never-married mothers from 
4 percent in 1976 to 18 percent in 1997 (Sorensen and Halpern, 1999). 
Even so, the huge increase in these cases in recent decades has served 
to reduce the overall effectiveness of the Federal-State program.

LEGISLATIVE HISTORY
(Note: For legislative history before 1996, see previous editions of 
the Green Book)

104th CONGRESS

   	Title III of the 1996 welfare reform law (Public Law 104-193) 
was devoted to major reforms of the Child Support Enforcement program. 
A section-by-section summary of these reforms follows:

Sec. 301--Imposes a State obligation to provide child support 
enforcement services for each child receiving assistance under IV-A 
(TANF), IV-E (foster care and adoption), and title XIX (Medicaid). 
Services must also be provided for others who apply, including 
families ceasing to receive assistance (no application is permitted 
for this group).
	Sec. 302--Changes distribution priorities to provide that 
families leaving welfare receive priority in payment of arrears. 
Changes are effective October 1, 1997 for postassistance arrears and 
October 1, 2000 for preassistance arrears. Exception is made for 
collections from the Federal Tax Refund Offset Program. Provides a 
hold harmless provision so that States are protected if the amount 
they lose because of changes in distribution exceeds what they gain 
from the elimination of the $50 passthrough (eliminated October 1, 
1996). Sec. 303--Protects privacy rights with respect to confidential 
information. Sec. 304--Requires States to have procedures for 
providing notices of proceedings and copies of orders to recipients 
of program services or parties to cases being served under title IV-D.
  	Sec. 311--Specifies requirements for the central State 
registry, including maintaining and updating a payment record and 
extracting data for matching with other databases. Allows automated 
linkages of local registries. 

Sec. 312--Specifies requirements for the centralized collection and 
disbursement of support payments, including the monitoring of 
payments, generating wage withholding notices, and automatic use of 
administrative enforcement remedies. Under some circumstances, 
permits linkages of local disbursement units to form centralized 
State disbursement unit for collection and disbursement of child 
support payments. Requires distribution within 2 business days of 
receipt of collection; requires transmission of withholding orders 
to employers within 2 business days of notice of income source 
subject to withholding. 

Sec. 313--Requires employers and labor organizations to report name, 
address, Social Security number (SSN), and employer identification 
number of new hires to State directory of new hires within 20 days of 
hire (in the case of an employer transmitting reports magnetically or 
electronically, reports may be made by two monthly transmissions); 
requires the report to be the W-4 or equivalent at option of the 
employer with penalties assessed for failure to report. State 
directory must perform database matching using SSNs and report 
findings to any State; directory must also report information to the 
National directory within 3 business days, and issue withholding 
notices within 2 business days of match, among other requirements.

Sec. 314--Strengthens and expands income withholding from wages to pay 
child support by reducing the time for employers to remit withheld 
wages to  7 business days and adding a State law requirement that 
allows issuance of electronic withholding orders by State agency and 
without notice to obligor.

Sec. 315--Includes requirements for access by State child support 
agency to locator information from State motor vehicle and law 
enforcement systems.

	Sec. 316--Expands the authority of FPLS to obtain information 
and locate individuals. Permits access to the Federal Parent Locator 
Service (FPLS) for the enforcement of child custody and visitation 
orders but specifies that requests must come through courts or child 
support agencies. Requires establishment of a Federal case registry of 
child support orders, and details guidelines for the National 
directory of new hires. Allows disclosure of certain information, 
including Federal tax offset amounts, to child support enforcement 
agents.

Sec. 317--Requires use of SSNs on applications for professional 
licenses, commercial driver's licenses, occupational license or 
marriage licenses, and in records for divorce decrees, support orders, 
paternity determinations or acknowledgments and death certificates.
Sec. 321--Mandates adoption by all States of the Uniform Interstate 
Family Support Act.  	
ec. 322--Clarifies priorities for recognition of orders.

Sec. 323--Requires States to respond within 5 business days to a 
request from another State to enforce a support order; electronic 
means are allowed for transmitting requests.
Sec. 324--Calls for the promulgation of forms, developed by the 
Secretary of the U.S. Department of Health and Human Services (DHHS), 
to be used in interstate income withholding cases, the imposition of 
liens, and administrative subpoenas across State lines.

Sec. 325--Grants authority to State IV-D programs to order genetic 
testing for paternity establishment, issue a subpoena for financial 
or other information, and require all entities to respond to 
requests for information "without the necessity of obtaining an 
order from any other judicial or administrative tribunal, but 
subject to due process safeguards as appropriate.'' Grants States 
access to public records such as vital statistics of marriage, 
birth and divorce, State and local tax records, real and titled 
personal property, license records, employment security records, 
public assistance programs, motor vehicle records, and corrections 
records. Also grants access to certain private records such as 
public utility and cable television records and financial 
institution data, among other administrative measures.

Sec. 331--Streamlines the legal processes for establishment of 
paternity, allows establishment of paternity anytime before a child 
turns 18, and provides for mandatory genetic testing in contested 
cases, among other provisions.

Sec. 332--Mandates that State programs publicize the availability and 
encourage the use of procedures for voluntary establishment of 
paternity and child support.
	Sec. 333--Requires States to determine whether recipients of 
aid under the TANF program or Medicaid are cooperating with the State 
in conducting child support activities against the noncustodial 
parent.

Sec. 341--Requires the Secretary of HHS to develop a new cost-neutral 
incentive system by March 1, 1997 which provides additional payments 
to any State based on such State's performance. Increases the 
mandatory IV-D paternity establishment percentage in graduated phases 
from 75 to 90 percent.

Sec. 342--Changes the audit process to be based on performance 
measures and requires the Secretary to ensure that State data meets 
high standards of accuracy and completeness.  	

Sec. 343--Requires States to collect and report program data in a 
uniform manner as a State plan requirement.

Sec. 344--Creates additional requirements for the State automated data 
processing systems, and sets a deadline of October 1, 2000 for 
implementation. Contains a new implementation timetable that extends 
to October 1, 1997 the deadline by which a State must have an 
automated case tracking and monitoring system meeting all Federal 
IV-D requirements up through the enactment of the Family Support 
Act of 1988. Caps aggregate spending on the new automated system at 
$400,000,000 and requires the Secretary to devise a formula for 
distributing these funds among the States. The Federal Government 
will pay  80 percent of State costs of meeting the new requirements.

Sec. 345--Sets aside 1 percent of the Federal share of reimbursed 
public assistance for information, training, and related technical 
assistance concerning State automated systems and research, 
demonstration, and special projects of regional or national 
significance. An additional 2 percent is set aside for the operation 
of the FPLS.

Sec. 346--Clarifies data collection requirements and eliminates 
requirements for unnecessary or duplicate information. Several new 
data reports are to be included in the annual report to Congress, 
including information about State compliance.

Sec. 351--Requires processes for periodic modification of all child 
support orders, with review occurring every 3 years, upon request.

Sec. 352--Expands access and use of consumer reports by child support 
agencies for establishing and modifying child support.

Sec. 353--Specifies that depository institutions are not liable for 
disclosing financial information to the Child Support Enforcement 
Agency; the Child Support Enforcement Agency is prohibited from 
disclosing information obtained except for child support purposes.

Sec. 361--Makes technical corrections to the Social Security Act 
section on Internal Revenue Service (IRS) collection of arrearages.

Sec. 362--Eliminates separate withholding rules for all Federal 
employees. Establishes procedures by which Federal agencies must 
aggressively pursue child support collections from Federal employees.

Sec. 363--Establishes procedures by which all branches of the armed 
forces must aggressively pursue child support collections from Federal 
employees.

Sec. 364--Requires States to have laws that prevent obligor from 
transferring income or property to avoid paying child support.

Sec. 365--Requires State child support officials to have the authority 
to seek a judicial or administrative order that requires any 
individual owing past-due support to pay such support in accordance 
with a plan approved by the court or participate in work activities.

Sec. 366--Provides a definition of a support order.

Sec. 367--Requires all child support delinquencies and their amounts 
to be reported to credit bureaus.

Sec. 368--Requires liens on real and personal property and the 
extension of full faith and credit to liens arising in another State 
in cases of past-due child support. 

Sec. 369--Requires States to have laws providing for the suspension of 
driver's, professional, occupational, and recreational licenses.

Sec. 370--Establishes a process by which the U.S. Department of Health 
and Human Services can submit the names of delinquent obligors who are 
at least $5,000 in arrears to the State Department for the denial of 
their passports.

Sec. 371--Authorizes Federal officials to declare any foreign country 
to be a foreign reciprocating country for purposes of establishment 
and collection of child support obligations.  	

Sec. 372--Requires States to enter agreements with financial 
institutions doing business in the State to develop a data match 
system by which records on individuals having accounts with the 
financial institution are matched against the list of child support 
obligors who have overdue payments.

Sec. 373--Adds a State option that a child support order of a child of 
minor parents, if the mother is receiving cash assistance, may be 
enforceable against parents of the noncustodial parent of the child.

Sec. 374--Clarifies that child support assigned to a State in 
assistance cases is not dischargeable in bankruptcy.

Sec. 375--Allows States to enter cooperative agreements with Indian 
tribes; allows the Secretary to make direct Federal funding to Indian 
tribes meeting certain criteria.

Sec. 381--Requires the application of the Employee Retirement Income 
Security Act (ERISA) to support orders that are judgments, decrees or
orders issued by any court of competent jurisdiction or through a 
State administrative process.

Sec. 382--Adds a new State law requirement providing that the State 
IV-D agency have procedures for notifying a new employer of an absent 
parent, when the absent parent was providing health care coverage of 
the child in the previous job, of the medical support obligation.

Sec. 391--Provides $10 million per year to the Secretary to award 
grants to States for the purpose of establishing programs to 
facilitate noncustodial parents' access to and visitation of their 
children.

105th CONGRESS

Public Law 105-33, the Balanced Budget Act of 1997, made 28 technical 
changes to the 1996 welfare reform law (Public Law 104-193).

	Public Law 105-187, the Deadbeat Parents Punishment Act of 1998, 
established two new categories of felony offenses, subject to a 2-year 
maximum prison term: (1) traveling in interstate or foreign commerce 
with the intent to evade a support obligation if the obligation has 
remained unpaid for more than 1 year or is greater than $5,000; and 
(2) willfully failing to pay a child support obligation regarding a 
child residing in another State if the obligation has remained unpaid 
for more than 2 years or is greater than $10,000.

Public Law 105-200, the Child Support Performance and Incentive Act of 
1998, established a new cost/budget-neutral incentive system based on 
five performance measures that create strong incentives for States to 
operate efficient and effective programs. The law also imposed less 
severe financial penalties on States that failed to meet the October 
1997 deadline for implementing a statewide CSE automated data 
processing and information retrieval system. It also included 
provisions related to medical support and privacy protections, and 
makes other minor changes.

Public Law 105-306, the Noncitizen Benefit Clarification and Other 
Technical Amendments Act of 1998, included a correction to Public Law 
105-200 that allows a State that failed to comply with the 1996 child 
support data processing requirements to have its annual penalty 
reduced by 20 percent for each of the five performance measures under 
the child support incentive system for which it achieves a maximum 
score. In addition, the provision clarified the date by which States 
must pass laws implementing medical child support provisions to 
allow time for State legislatures that meet biennially to pass laws 
after final Federal regulations are issued in year 2000.

106th CONGRESS

Public Law 106-113, the Fiscal Year 2000 Consolidated Appropriations 
Bill, provided an alternative penalty for States that are not in 
compliance with the centralized State disbursement unit requirement, 
but which have submitted a corrective compliance plan by April l, 
2000, that describes how, by when, and at what cost the State would 
achieve compliance with the State disbursement unit requirement. The 
Secretary of HHS is required to reduce the amount the State would 
otherwise have received in Federal child support payments by the 
penalty amount for the fiscal year. The penalty amount percentage is 
4 percent in the case of the first fiscal year of noncompliance; 
8 percent in the second year; 16 percent in the third year; 
25 percent in the fourth year; or 30 percent in the fifth or any 
subsequent year. In addition, the law provides for coordination of 
the alternative disbursement unit penalty with the automated systems 
penalty so that States that fail to implement both the automated 
data processing requirement and the State disbursement unit 
requirement are subject to only one alternative penalty.

Public Law 106-169, the Foster Care Independence Act of 1999, limited 
the hold harmless requirement of current law by stipulating that 
States would only be entitled to hold harmless funds if the State's 
share of child support collections are less than they were in fiscal 
year 1995 and the State has distributed and disregarded to welfare 
families at least 80 percent of child support collected on their 
behalf in the preceding fiscal year or the State has distributed to 
former welfare recipients the State share of child support payments 
collected via the Federal Income Tax Offset Program. If these 
conditions are met, the State's share of child support collections 
would be increased by 50 percent of the difference between what the 
State would have received in fiscal year 1995 and its share of child 
support collections in the pertinent fiscal year. Public Law 106-169 
repealed the hold harmless provision effective October 1, 2001.



STATISTICAL TABLES

TABLE 8-10--STATE PROFILE OF COLLECTIONS AND EXPENDITURES, FY 2002




[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]




TABLE 8-11--TOTAL DISTRIBUTED COLLECTIONS BY STATE, FISCAL YEARS 1997,
1999, 2000, 2001, and 2002



[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]



TABLE 8-12-- DISTRIBUTED COLLECTIONS OF CURRENT, FORMER, AND NEVER 
ASSISTANCE, BY STATE, FY 2002



[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]




TABLE 8-13--DISTRIBUTED TANF/FOSTER CARE COLLECTIONS BY STATE, FISCAL 
YEARS 1997, 1999, 2000, 2001, and 2002



[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]




TABLE 8-14--DISTRIBUTED NON-TANF COLLECTIONS BY STATE, FISCAL YEARS 
1997, 1999, 2000, 2001, and 2002


[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]



TABLE 8-15--NUMBER OF CASES IN WHICH A COLLECTION WAS MADE ON AN 
OBLIGATION BY CURRENT, FORMER, AND NEVER ASSISTANCE, BY STATE, 
FISCAL YEAR 2002



[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]



TABLE 8-16--NUMBER OF CASES IN WHICH A COLLECTION WAS MADE ON AN 
OBLIGATION, BY STATE, FISCAL YEARS 1999-2002


[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]



TABLE 8-17--FEDERAL INCOME TAX REFUND OFFSET PROGRAM COLLECTIONS, 
BY STATE, 1997-2001


[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]


TABLE 8-18-COST EFFECTIVENESS RATIO UNDER THE CHILD SUPPORT 
PERFORMANCE INCENTIVE ACT OF 1998 FISCAL YEARS 1999-2002


[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]


TABLE 8-19--CHILDREN IN THE IV-D CASELOAD FOR WHOM PATERNITY WAS 
ESTABLISHED OR ACKNOWLEDGED, BY STATE, FISCAL YEARS 1998-2002


[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]


TABLE 8-20-- NUMBER OF PATERNITIES ESTABLISHED OR ACKNOWLEDGED, BY 
STATE, FISCAL YEARS 1997-2001 


[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]



TABLE 8-21--OUT-OF-WEDLOCK BIRTHS, BY STATE,  FISCAL YEARS 1999-2001


[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]



TABLE 8-22--PERCENTAGE OF CHILD SUPPORT PATERNITIES ESTABLISHED, BY 
STATE, FISCAL YEARS1999-2001

[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]



TABLE 8-23--STATES USING THE INCOME SHARES AND PERCENTAGE OF INCOME 
APPROACHES TO ESTABLISHING CHILD SUPPORT GUIDELINES 

[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]



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